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Germany: Proposed offsetting model for import VAT; other VAT developments

Offsetting model could become effective on January 1, 2030.

October 20, 2026

The Conference of Finance Ministers on September 10, 2026, endorsed the introduction of an offsetting model for import VAT, under which import VAT would be offset directly against the corresponding input VAT deduction, eliminating the need to pre-finance import VAT.

Comparable mechanisms are already in place in several other EU member states.

At this stage, the proposal does not yet constitute a legislative amendment, as changes at the federal level and necessary technical preparations must first be completed. Based on current plans, the offsetting model could become effective on January 1, 2030.

Read an August/September 2026 report prepared by the KPMG member firm in Germany

Other recent VAT developments that may affect businesses in Germany include:

  • Planned legislative changes to modernize and structurally reform customs administration
  • Travel agent margin scheme applicable to loss-making promotional excursions (Court of Justice of the European Union (CJEU) judgment)
  • Company directors held liable for unpaid VAT entitled to challenge the underlying tax assessment (CJEU judgment)
  • Simultaneous VAT-exempt leasing of property during a business transfer requires input VAT adjustment (General Court of European Union (GCEU) decision)
  • Uniform VAT rules preclude limiting non-taxable asset transfers based on national income tax categories (GCEU decision)
  • Gifts of co-ownership interests in a sole proprietorship do not qualify as non-taxable transfers (GCEU decision)
  • Transport under duty suspension does not automatically qualify a supply as VAT-exempt (GCEU decision)
  • Federal Fiscal Court (BFH) referral to CJEU concerning automated "fixed establishments"
  • Input VAT deductible on advisory costs incurred to pursue damages from aborted project (BFH decision)
  • Cash accounting restricted to professionals not voluntarily keeping net-worth comparison books (BFH decision)
  • Recharge of flat-rate canteen costs for temporary workers is internal cost allocation (BFH decision)
  • Munich Fiscal Court referral to CJEU regarding validity of €1,000 de minimis threshold for input tax adjustments
  • Restaurant's liability for incorrectly shown VAT on anonymous till receipts partially upheld (Berlin-Brandenburg Fiscal Court decision)

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