Germany VAT Guide

What is the tax called?

“Umsatzsteuer” (turnover tax, abbreviation = USt), inofficially also “Mehrwertsteuer” (value added tax, abbreviation = “MwSt”)

What is the tax authority?

Finanzamt (tax office in charge)

What type of tax is it?

Tax on supplies of goods and services, businesses can usually recover USt paid on their purchases

What is it due on?

German VAT is due on all none-exempted supplies of goods and services deemed supplied in Germany.

What are the VAT rates?

The current standard rate is 19%, the current reduced rate is 7%.

What does a VAT number look like?

The VAT IDNo. for intra-community transactions starts with DE followed by 9 digits (DE123456789).

In addition, German VAT payers have a local tax number for VAT purposes, which is the reference for filing and paying the VAT. The format varies slightly between the Bundesländer but roughly looks like this: 99 / 999 / 99999 (code for the tax authority in charge, followed by a code for the department in charge and closing with an number identifying the tax payer).

Is there a registration limit?

With effect from 1 Jan. 2025 EU businesses may benefit from the VAT exemption for small businesses, if their turnover in the EU in the previous calendar and the current calendar year does not exceed 100 kEUR.

When does a non-established entity need to register?

A non-established entity needs to register for VAT purposes in the following situations:

• The entity has sales of goods deemed supplied in Germany (e.g. goods shipped from a warehouse located in Germany)
• The entity has purchased reverse charge supplies that are deemed supplied in Germany (e.g. construction services supplied to a non-established construction business)
• The entity has purchased goods that have been shipped to Germany in a cross-border supply and the simplification for triangulation supplies does not apply.

The entity sells admission tickets for an event in Germany (e.g. congress, seminar).

When is the place of supply in Germany?

The place of supply rules are rather complex. As a general indication

• goods are deemed supplied in Germany, when they are shipped from a place in Germany
• services provided to a business customer are usually deemed supplied where the customer belongs (= has established his business)
• services related to land are deemed supplied where the land is located

other services are usually supplied where the supplier has established his business.

Any special rules

There are several reverse charge VAT schemes including reverse charge VAT schemes for

• construction services and for
• cleaning services for buildings.

In addition, there are several special rules, that are also in effect in other EU Member States like OSS, exemptions for small businesses.

Does a non-established entity need a fiscal representative?

No, in most instances, a fiscal representative is not mandatory.

How often do VAT returns need to be submitted?

The regular filing frequency is quarterly, depending on the VAT owed the tax payer may be asked to file monthly VAT returns.
If the VAT liability is very low, the tax payer may be exempted from filing quarterly VAT returns.

In addition, the tax payer always needs to file an annual VAT return for each calendar year.

Are penalties imposed for late registration?

Usually not. But the tax authorities may decide to investigate whether this constitutes a case of VAT fraud or negligent VAT underpayment, which are crimes.

Are penalties imposed in other circumstances?

There are penalties for late filing of tax returns and penalties for late payment of taxes due.

Can VAT incurred by non-DE businesses be recovered?

EU businesses and businesses located outside the EU in countries with reciprocal agreements can recover German VAT incurred via lodging an cross-border refund application with the BZSt (Bundeszentralamt für Steuern).

Can VAT be deducted?

VAT can be deducted on the same conditions that apply for domestic businesses (proper invoice, purchase related to non-exempt supply, etc.)

Do I need to issue an invoice?

The German tax laws stipulate that the supplier needs to issue an invoice for supply deemed supplied in Germany if:

• the customer is a business and has purchased the supply for his business.
• the customer although not a business is legal person.

the supply relates to construction works or other services related to ground property

Other

Incorrectly charged VAT is irrecoverable, even if the VAT has been duly reported and paid by the supplier.

Incorrect invoicing can usually be corrected by the supplier.

German purchase VAT is only recoverable, if the supplier’s invoice contains all mandatory invoice items for a “proper” VAT invoice as specified by German VAT laws:

1. Full name and full address of the supplier/vendor
2. Full name and full address of the customer
3. VAT identification number or tax number of the supplier/vendor = in German: “USt-IdNr.”, “Steuernummer”
4. In case of intra-community supplies of goods or B2B-services to an EU customer: VAT IdNo. of the customer and VAT IdNo. of the supplier/vendor
5. Date the invoice has been issued
6. Consecutive and unique invoice number
7. Quantity and type of goods supplied or scope and type of services rendered
8. Time of supply of goods/services (tax point) = in German: “Lieferdatum”/”Leistungsdatum”
9. Net consideration before VAT (if different VAT rates and/or VAT exemptions apply, separated by VAT rates/exemptions)
10. Applicable VAT rate
11. VAT amount or in case of VAT exemption an indication of the applicable VAT exemption

N.B.: There are additional requirements for specific circumstances (self-billing, reverse charge, etc.).