German VAT at the start of the business, first 2 years
If you are starting a business in Germany, and you are obliged to pay VAT, and you are not a small entrepreneur according to Art. 19 I UStG (Kleinunternehmer), then in the first two calendar years you have to make every month a VAT declaration to the tax office. This regulation is for VAT fraud to be avoided, because in the past companies used under the old rules the gap in the law for fraud.
Special VAT Prepayment
The basic rule (Art. 18 I S. 1 UStG) is that every entrepreneur is obliged to send 10 days after the end of the previous month the monthly VAT declaration to the tax office.
Now, this short term is a great problem for a lot of small companies – and for their accountants, too. To take care of this, the VAT law makes an offer to everybody. Art. 18 VI UStG gives a choice to expand the deadline up to 4 weeks. For this prolongation. the taxpayers have to pay a special VAT prepayment, named Umsatzsteuersondervorauszahlung. This is a standard procedure for most companies.
MBA for Finance and Financial Services (UK), Steuerfachwirt (GER)