Vorsteuerüberhang in Germany: Definition, Calculation, Refund & Deadlines

✍️ TL;DR:

A Vorsteuerüberhang is a VAT input-tax surplus—it occurs when your input VAT paid on business purchases exceeds the output VAT collected on sales for a period. In your VAT return, the surplus is refunded to your bank account (or offset against other tax debts).

A Vorsteuerüberhang is one of those tax terms that sounds intimidating but is actually quite simple. In English, it means an input-tax surplus — the situation where the VAT you’ve paid on your business expenses (input VAT) is higher than the VAT you’ve charged your clients (output VAT) during a given reporting period.

Think of VAT as a flow of money through your business rather than a cost in itself. You collect VAT on your invoices and pay VAT on your purchases, but in the end, you only owe (or reclaim) the difference. When more VAT flows out of your account (as input tax on purchases) than flows in (as VAT you collect from customers), you end up with a surplus. This difference is what the tax office refers to as a Vorsteuerüberhang.

In practice, this means you’re entitled to a refund from the Finanzamt (tax office). The refund balances your negative VAT position and is processed through your regular VAT return (Umsatzsteuervoranmeldung). For freelancers and small businesses, it can feel like a temporary liquidity boost — the state is effectively reimbursing you for the excess VAT you’ve prepaid.

The legal foundation for this mechanism lies in the German VAT Act (Umsatzsteuergesetz, UStG):

• §15 UStG regulates the Vorsteuerabzug — your right to deduct input VAT on legitimate business expenses.

• §18 UStG sets the rules for filing VAT returns and how surpluses or liabilities are settled.

Together, these sections ensure VAT neutrality: businesses don’t bear VAT as a cost but act as intermediaries in collecting and remitting it. When the balance swings in your favor, the Vorsteuerüberhang ensures that you receive your excess VAT refund.

When a Vorsteuerüberhang happens (common scenarios)

A Vorsteuerüberhang doesn’t just appear randomly — it’s usually tied to how your business spends and earns within a specific period. Since VAT is calculated over reporting cycles (monthly or quarterly), any imbalance between purchases and sales during that time can create a temporary surplus. Here are the most common situations where this happens:

Heavy investment months

When you invest in new equipment, tools, software, or inventory, you pay significant amounts of input VAT on those purchases. If your sales during that month or quarter are relatively low, your input VAT easily exceeds your output VAT, creating a refund situation. This is especially typical when you:

• buy expensive hardware or set up a new office,

• stock up before a sales season, or

• renovate or upgrade your workspace.

Business launch or seasonal slowdowns

Startups and newly registered freelancers often experience a Vorsteuerüberhang in their first few months — they incur setup costs (website, laptop, licenses, marketing) before meaningful revenue begins. Similarly, seasonal businesses (like photographers or consultants with off-peak periods) might file a surplus during quiet months when expenses continue but income drops.

Exports and reverse-charge cases

In some cases, your sales are VAT-free, but your expenses still include VAT. That’s common when you sell goods or services outside Germany (exports) or to EU clients under the reverse-charge rule. Since you don’t charge VAT on those invoices, there’s no output VAT to offset your input VAT — leading to a Vorsteuerüberhang even if your business is doing well.

Timing differences in VAT accounting

VAT accounting can be based on either cash received (vereinnahmte Entgelte) or invoiced amounts (vereinbarte Entgelte). If you’re using the cash basis and many clients haven’t yet paid their invoices, your output VAT is temporarily lower than your input VAT. This timing mismatch can create a short-term surplus that usually balances out once payments arrive.

Filing frequency and refund timing

By default, most small businesses in Germany file quarterly VAT returns, but if your prior-year VAT payments or refunds exceed €9,000 (as of 2025), you can switch to monthly filing. This is particularly useful if you often have a Vorsteuerüberhang, as you’ll get your refunds faster and improve cash flow.

How to calculate a Vorsteuerüberhang (step-by-step)

Calculating a Vorsteuerüberhang is simple once you understand the logic behind VAT: you’re comparing what you collected from clients to what you paid to suppliers. If your paid VAT exceeds the VAT you collected, the tax office owes you the difference.

Here’s how to calculate it step-by-step:

Step 1: Add up your output VAT

Start by adding all VAT amounts shown on your outgoing invoices for the reporting period (month or quarter).
This represents the Umsatzsteuer (output VAT) you owe to the tax office based on your sales.

Example:
You issued invoices totaling €5,000 net with 19% VAT, which equals €950 output VAT.

Step 2: Add up your input VAT

Next, sum up the VAT you paid on supplier invoices that are eligible for input-tax deduction under §15 UStG.
This includes VAT on business-related purchases such as office supplies, subscriptions, or equipment.

Example:
You bought a new camera for €2,000 + 19% VAT (€380), and paid €500 + 19% VAT (€95) for software.
Your total input VAT is €475 (€380 + €95).

Step 3: Apply the formula

Use this simple formula:

Vorsteuerüberhang = Input VAT – Output VAT

If the result is positive, you have an input-tax surplus — meaning you get a refund from the Finanzamt.
If the result is negative, you owe VAT (a Zahllast).

Example calculation:

Here, your input VAT (€475) is less than your output VAT (€950), so you owe €475 to the Finanzamt.
But if the situation were reversed — say you invested heavily and your input VAT totaled €2,000 while your output VAT was only €500 — then:

Vorsteuerüberhang = €2,000 - €500 = €1,500

You would have a Vorsteuerüberhang of €1,500, which the Finanzamt would refund to your business account after processing your VAT return.

💡 In bookkeeping, input VAT is posted to an asset account (Vorsteuerkonto), while output VAT is a liability account (Umsatzsteuerkonto). When input VAT exceeds output VAT, the balance becomes a receivable from the tax office — your Vorsteuerüberhang.

When is the surplus paid out — and how?

Once you’ve calculated a Vorsteuerüberhang, you don’t have to wait until the end of the year to get your money back. The refund is processed through your regular VAT return (Umsatzsteuervoranmeldung, or USt-VA) — the same form you’d use if you owed VAT.

Filing deadlines and extensions

By law (§18 UStG), your VAT return must be submitted by the 10th day after the end of each reporting period — either monthly or quarterly, depending on your turnover.
For example:

• January VAT return → due by February 10th.

• Q1 VAT return → due by April 10th.

If you’ve applied for a “Dauerfristverlängerung” (permanent filing extension), you gain an extra month, so your January return would be due by March 10th instead. This is especially useful for freelancers and small businesses who often have irregular expenses and need more time to prepare their filings.

Refund process

When your filed return shows a Vorsteuerüberhang, the Finanzamt automatically initiates a refund — there’s no separate request needed. The amount is usually transferred to your business bank account, which is registered with the tax office.

However, there’s one catch: if you have any other outstanding tax debts (like income tax prepayments, late fees, or trade tax), the Finanzamt will offset your surplus against those before paying out the remainder.

Processing times and common pitfalls

Refunds are typically processed within a few days to a few weeks, but delays can happen — especially for new businesses or unusually high surpluses. The tax office may manually review your submission to confirm your invoices and VAT eligibility.

Here are the most common reasons refunds are delayed or rejected:

• Missing or invalid IBAN: ensure your bank account details are correctly registered with your local Finanzamt.

• Incomplete or incorrect invoices: missing supplier VAT ID, invoice date, or breakdown of VAT rates can invalidate your input tax claim.

• Frequent large refunds: repeated Vorsteuerüberhänge may trigger a plausibility check, especially if your reported sales remain low.

• Outstanding tax obligations: the surplus might be held back and automatically offset.

Eligibility & documentation (don’t get tripped up)

A Vorsteuerüberhang refund isn’t automatic just because you’ve spent more than you earned — it’s only valid if the VAT you’ve paid qualifies for deduction under German tax law. To avoid having your refund delayed or denied, make sure your documentation and invoices meet the legal requirements.

Who is eligible for input tax deduction

You can only claim input VAT (Vorsteuerabzug) if you are:

• A VAT-registered business in Germany (not a Kleinunternehmer under §19 UStG), and

• The purchases in question are used exclusively for taxable business activities (not private or VAT-exempt ones).

If you meet these conditions, the VAT you paid on your supplier invoices becomes deductible under §15 UStG — meaning it can be offset against the VAT you collected on your own sales.

Invoice requirements under §14 and §15 UStG

For your input VAT to be accepted, the invoices you receive must comply with the strict format outlined in §14/§15 UStG. Each invoice must include:

• The full name and address of both supplier and recipient,

• The supplier’s VAT ID number,

• A unique invoice number,

• The invoice date and date of supply,

• A clear description of goods or services,

• The net amount, VAT rate, and VAT amount,

• The total (gross) amount due.

If any of these details are missing or incorrect, your input-tax claim can be rejected, which means the Finanzamt might reduce or deny your refund until corrected.

Common blockers that trip up refunds

Even experienced freelancers and small businesses can lose part of their Vorsteuerüberhang due to minor mistakes. Watch out for these red flags:

• Private or non-business expenses: You can’t deduct VAT on personal items (like your smartphone or home office furniture used mostly for private purposes).

• Mixed-use assets without clear apportionment: If you use a laptop or car both privately and professionally, you must split the costs — only the business share is deductible.

• Late or incorrect invoice corrections: If you receive a corrected invoice after your VAT return was filed, you need to amend your USt-VA to include the updated figures.

• Missing proof of payment (especially for cash transactions): the tax office may require evidence that the invoice was actually paid.

Special cases you should know

While most Vorsteuerüberhänge arise from simple mismatches between input and output VAT, there are a few special situations that affect when and how a surplus appears — and what happens to it once it’s declared in your VAT return. Understanding these nuances helps you avoid surprises and optimize your cash flow.

1. Cash-basis vs. accrual VAT (vereinnahmte vs. vereinbarte Entgelte)

German VAT law allows businesses to choose between two accounting methods that determine when VAT is recognized:

• Vereinnahmte Entgelte (cash basis):
  You declare VAT only when you actually receive or pay money. This is common for freelancers and small businesses under §20 UStG.
  → Result: If clients pay late, your output VAT is delayed, but your input VAT is recognized as soon as you pay your supplier, temporarily creating a Vorsteuerüberhang.

• Vereinbarte Entgelte (accrual basis):
  You declare VAT based on invoice dates, regardless of whether payments have been made.
  → Result: VAT on both sides is recorded immediately, reducing timing differences — but offering less flexibility in managing cash flow.

Choosing the right method affects how often and when a surplus appears. Many small businesses prefer the cash-basis method precisely because it delays VAT payments until income is received.

2. Reverse Charge and intra-EU transactions

Another source of VAT confusion (and sometimes of Vorsteuerüberhänge) is reverse charge — when the tax liability shifts from the supplier to the customer.

This applies in two main contexts:

• Domestic reverse charge: e.g., certain construction or subcontracting services where the recipient reports both input and output VAT.

• Intra-EU acquisitions and cross-border services: when buying from EU suppliers, you report both output VAT and input VAT in your USt-VA.

In both cases, the net effect is often zero, as the same amount of VAT appears on both sides. However, in months with low sales or delayed domestic invoices, this can still tip the balance toward a small surplus.

Exports outside the EU, by contrast, are zero-rated — you charge no VAT on your sales but still pay input VAT on your costs, which can easily produce a Vorsteuerüberhang.

3. Offsetting and carrying forward credits

When your VAT return shows a Vorsteuerüberhang, you have two options inside the USt-VA form:

1. Request a payout (Erstattung beantragen)
   – The Finanzamt transfers the surplus to your registered bank account.

2. Carry the credit forward (mit nächster Vorauszahlung verrechnen)
   – The surplus is automatically offset against future VAT liabilities.

Carrying forward can make sense if you expect higher sales (and therefore VAT owed) in the next period, while requesting a payout improves liquidity immediately.

If you have other tax obligations, the Finanzamt may automatically offset your surplus against them — for example, income tax prepayments or past due penalties. You’ll see this in the official notice (Abrechnungsbescheid).

How Norman helps you get your Vorsteuerüberhang refund — without headaches

Filing your VAT return and claiming a Vorsteuerüberhang refund can be effortless. With Norman, Vorsteuerüberhang calculation is handled automatically — so you can stay compliant, on time, and in control of your cash flow.

Automated VAT returns (USt-VA) — submitted directly from Norman

Norman automatically prepares and submits your Umsatzsteuervoranmeldung through Germany’s official ELSTER interface. You also get automatic filing reminders before each due date (10th of the month or quarter).

No more logging into Elster or juggling spreadsheets — your VAT position is calculated and filed for you.

Bank & receipt sync — smarter input VAT detection

Norman connects directly to your business bank account and parses the uploaded documents. It automatically:

• Detects input VAT on eligible expenses,

• Matches receipts to transactions,

• Maps reverse-charge cases (EU purchases, foreign invoices, subcontractors).

That means your Vorsteuerüberhang is always accurate — even in complex cases.

Norman handles your USt-VA from start to finish — calculating and filing your Vorsteuerüberhang refund automatically.

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