GRAFENWOEHR, Germany -- The Supplementary agreement to the NATO Status of Forces Agreement affords some tax breaks to personnel under orders to be in Germany.
Department of Defense personnel stationed in or temporarily assigned to Europe may be eligible to use the U.S. Forces Tax-Relief Program to avoid paying the value-added tax, or Mehrwertsteuer (MwSt), for their personal purchases.
Germany imposes a VAT of either 19 percent or a reduced rate of 7 percent on most items/services purchased. This tax is similar to a sales tax in the U.S., but it is generally already added into the price. The reduction of the sticker price occurs when an eligible U.S. Forces member presents the vendor with a valid VAT form when the order is being placed for an item or service.
In order to participate in the program, a U.S. Forces member (sponsor) must establish an account at a VAT office by filling out a registration form.
Be aware that there are restrictions and that intentional or unintentional abuse of the program will lead to personal tax liabilities, expulsion from the program, commander or supervisor notification, or, worse, it may result in federal criminal convictions.
The list of restrictions includes:
- Sharing these tax breaks with non-SOFA protected persons is prohibited.
- You may not use VAT forms for revenue generating activities (e.g., home-based business, business as an independent contractor, buying and fixing cars for re-sale, etc.).
- Landlords cannot use VAT forms to repair or improve their property.
- You may not use VAT forms for any long-term contracts.
- Repetitive purchases from the same vendor may be combined on one VAT form only if the transactions occur within one month, the total amount does not exceed 2,499.99 euros, and all purchases are processed no later than the last day of that month.
Here's a tip: Keep a VAT form in your glove box, even if you are not intending to go shopping that day. It will save you the 19 percent tax, and you never know when you might find that great piece you've been looking for.
More information on restrictions, policies and procedures for VAT forms can be found on the MWR website at grafenwoehr.armymwr.com/programs/value-added-tax-vat.
The Utility Tax Avoidance Program is another arm of the U.S. Forces Tax Relief Program and can be used by eligible personnel living in private rental while stationed in Germany.
UTAP is a way for individuals to secure effective tax relief from foreign taxes on residential consumption of electricity, gas and water in when living in off-post individual housing not administered under the government-leased housing program.
To be eligible for UTAP, individuals must receive their utilities from a provider that has a contractual agreement with the Tax Relief Office. If utility costs are listed as an additional cost, or "Nebenkosten," and paid directly to the landlord, then it is not covered by this program. All utility costs are covered for home owners.
German banking account information is required for enrollment in UTAP.
More information about UTAP and requirements for enrollment can be found on the MWR website at grafenwoehr.armymwr.com/programs/utilities-tax-avoidance-program-utap.
U.S. tourists and military personnel and their family members stationed in the continental U.S. or other duty locations outside of Europe and North Africa who are on leave in Europe are eligible for tax relief under the EU Tourist Tax Refund Program. Information about the EU Tourist Tax Refund Program can be obtained from Tourist Tax Refund Program offices at airports and other points of entry or exit in European countries.
U.S. Forces personnel and their dependent family members stationed in Germany or on authorized leave from a duty station in Europe or North Africa cannot receive tax relief under this tourist program since they have SOFA status and fall under the U.S. Forces Tax-Relief Program.
More information about the U.S. Forces Tax-Relief Program can be found in the Army in Europe Regulation 215-6, Individual Tax-Relief Program.