Germany

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VAT-registered businesses outside of the European Union are eligible to recover VAT on business costs from Germany under the 13th Directive.

VAT in Germany: Everything You Need to Know 

In 1968, Germany became one of the first countries to adopt a value-added tax (VAT), with a standard rate of 11%. Since then, Germany has adjusted its VAT rates to reflect economic trends. For example, at the onset of the COVID-19 pandemic, the German government lowered the standard and reduced VAT rates to stimulate the economy; as of December 31st, 2020, the rates have returned to 19%—their pre-pandemic normal.

This figure places Germany’s VAT rate a few points below the EU VAT average but within the acceptable range. As a member of the European Union, Germany is required to maintain a standard VAT rate above 15% and a reduced rate above 5%.

Current VAT Rates in Germany

While VAT in Germany may differ from other European Union member state rates, it’s still similar in how it’s applied. When it comes to today’s VAT, Germany separates its rates into three categories:

• Standard (19%) – Most products and services fall under the standard VAT rate.
• Reduced (7%) – Goods and services in the reduced VAT rate category include certain foods, books, medical supplies, and forms of transportation.
• Zero (0%) – Some forms of domestic and international transport are VAT-free. Additionally, some goods and services are exempt from the VAT program, such as cultural services, loans, and inter-community deliveries.

If you pay for VAT eligible goods or services from Germany and do not operate in the EU, you may be able to claim a VAT refund; Germany has a minimum VAT refund amount of €1,000.

How to Pay Your VAT Bill in Germany

Depending on your VAT amount from the previous calendar year, you are expected to pay your VAT bills either monthly, quarterly, or yearly.

• Monthly – Monthly returns are required if last year’s VAT amount was more than €7,500. Newly registered businesses must also submit monthly for the first two years. The payment deadline for each month is the 10th day of the following month.
• Quarterly – If last year’s VAT amount was between €1,000 and €7,500, you can pay quarterly. Your deadline is the 10th day of the month following each quarter.
• Yearly – For VAT amounts under €1,000, you can submit them annually. The deadline is July 31 of the following year.

To make your VAT return, you must register with the German tax office using ElsterOnline. You’ll find the forms you need under Formulare & Leistungen.

Germany VAT Compliance

If you provide goods or services to consumers or businesses within Germany, you may need to register for German VAT at a jurisdictional tax office. If your business has completed its German VAT registration, you will need to comply with all of the following VAT rules and regulations:

• Original invoices and receipts must be submitted in full and numbered consecutively
• An official business registration document from your country must be provided
• Accounts and records must be kept for at least 10 years
• Approved foreign exchange rates must be used
• Submissions must be made on time; late submissions will incur interest

The European Commission also ensures each EU member state is keeping up with VAT compliance and VAT directive.

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Sources:

Organisation for Economic Co-Operation and Development. Consumption Tax Trends – Germany. https://www.oecd.org/tax/consumption/consumption-tax-trends-germany.pdf

Office of the Federal Government. Drop in value added tax (VAT) – important questions and answers. https://www.bundesregierung.de/breg-en/search/faq-mehrwertsteuersenkung-1765150

European Commission. What is VAT? https://ec.europa.eu/taxation_customs/what-vat_en

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