Understanding MwSt in Germany: A Guide for Car Buyers and VAT Refunds

MwSt stands for Mehrwertsteuer, which translates to “value added tax.” It is the consumption tax applied to goods and services in Germany. The legal term in the tax code (UStG) is Umsatzsteuer (USt), but in daily use MwSt is far more common. Both terms refer to exactly the same tax at the same rates.

Germany applies two VAT rates: a standard rate of 19% on most goods and services, and a reduced rate of 7% on necessities such as food, books, public transport, and hotel stays. These rates have been in effect since 1 January 2007. A temporary reduction to 16%/5% applied from July to December 2020 during the COVID-19 pandemic but has since reverted.

The 7% rate applies to items listed in Anlage 2 of the UStG: food and non-alcoholic beverages, books and e-books, newspapers and magazines, public transport tickets, hotel accommodation (room only), tickets to cultural and sporting events, medical devices, agricultural products, and firewood. Restaurant meals for on-premises consumption are taxed at 19%.

Yes. Non-EU residents who buy goods in Germany and export them unused within three months can reclaim MwSt. You need a Tax-Free form from the retailer, a customs stamp at your EU exit point, and to submit the form to a refund operator (Global Blue, Planet Tax Free). Most operators require a minimum purchase of EUR 50 per receipt. The actual refund is typically 10–14.5% after the service fee.

Divide the gross price by 1.19 to get the net amount, then subtract: MwSt = Gross − (Gross ÷ 1.19). For example, a gross price of EUR 595 contains EUR 95 in MwSt (EUR 595 ÷ 1.19 = EUR 500 net). For goods at the reduced 7% rate, replace 1.19 with 1.07.

“MwSt ausweisbar” means the seller is VAT-registered and will show the MwSt amount as a separate line on the invoice. This is essential for any buyer who wants to reclaim VAT — whether through Vorsteuerabzug or an export refund. If MwSt is not shown separately (e.g. under the margin scheme per § 25a UStG), no VAT recovery is possible.

A VAT-registered business deducts the MwSt paid on business purchases (Vorsteuer) from the MwSt collected on sales. The difference is reported to the Finanzamt via periodic VAT returns filed through ELSTER — monthly for new businesses and quarterly or annually thereafter. You need a compliant invoice under § 14 UStG showing the supplier’s tax number and the MwSt amount on a separate line.

For EU businesses, refund applications must be submitted by 30 September of the following year. For non-EU businesses (§ 18 Abs. 9 UStG), the deadline is 30 June of the following year. Tourist Tax-Free Shopping forms must be stamped by customs within three months of purchase and submitted promptly after that. Missing any deadline means forfeiting the refund.

Yes. Online purchases shipped within Germany or to other EU countries include MwSt. For B2C sales to EU consumers, the One-Stop-Shop (OSS) scheme may apply once sales exceed EUR 10,000/year to other EU states. For shipments to non-EU countries, German MwSt is generally not charged as the sale qualifies as an export (§ 4 Nr. 1a UStG), though the buyer may owe import duties locally.

There is no practical difference. Umsatzsteuer (USt) is the official legal term in the tax code and on tax returns. Mehrwertsteuer (MwSt) is the colloquial term used on receipts and in pricing. Both refer to the same tax at the same rates (19%/7%). Invoices and accounting records use USt, while consumer-facing documents typically say MwSt.