GermanTaxCalculator—VATandIncomeTaxGuide

What is the German VAT standard rate?

The standard German VAT rate (Regelsteuersatz) is 19%. A reduced rate of 7% applies to food, books, newspapers, hotel accommodation, public transport, and certain medical supplies. Most B2B services within Germany apply the 19% standard rate.

How do I calculate German VAT from a gross amount?

To extract VAT from a gross (brutto) price at 19%: gross ÷ 1.19 × 0.19 = VAT. Net = gross ÷ 1.19. Example: €119 gross ÷ 1.19 = €100 net; VAT = €19. For 7%: gross ÷ 1.07 × 0.07 = VAT.

What is the Kleinunternehmerregelung and should I use it?

The Kleinunternehmerregelung (§19 UStG) exempts businesses with turnover below €22,000/year from charging VAT. No quarterly Umsatzsteuervoranmeldung required. Disadvantage: you cannot recover Vorsteuer (input VAT) on purchases. Recommended only for very small businesses selling primarily to private consumers.

When must a German company register for VAT?

Mandatory VAT registration: (1) when turnover exceeds €22,000 in the current year, (2) when expected to exceed €50,000 in the following year, (3) immediately for intra-EU B2B transactions and imports. Foreign companies making taxable supplies in Germany must register regardless of turnover.

What are the German personal income tax deadlines?

Annual income tax return (Einkommensteuererklärung) deadline: 31 July of the following year for self-filers. With a Steuerberater mandate: 28 February of the year after (extended). Quarterly prepayments (Vorauszahlungen) are due on 10 March, 10 June, 10 September, and 10 December.

What is the Splittingvorteil and how does it work for married couples in Germany?

Married couples filing jointly in Germany benefit from the Ehegattensplitting (income splitting). Both spouses combined income is halved, the tax on that half is calculated, and then doubled. This reduces the effective tax rate when there is a significant income difference between spouses. The Splittingvorteil is largest when one spouse earns significantly more — e.g. one partner earns €100,000 and the other €0, versus two single individuals each earning €50,000.

What is the German Lohnsteuer and how does it differ from Einkommensteuer?

Lohnsteuer (wage tax) is income tax withheld at source by German employers from employee salaries. It is paid monthly or quarterly to the Finanzamt. The Lohnsteuer is an advance payment of the employee's annual Einkommensteuer (income tax). If the withheld Lohnsteuer exceeds the actual annual tax liability (e.g. due to part-year employment or deductible costs), the employee receives a refund via the annual Einkommensteuererklärung.

What are German Steuerklassen (tax classes) and which should I choose?

Germany assigns employees to 6 Steuerklassen affecting Lohnsteuer withholding: Class I (single), II (single parent), III (married, higher earner), IV (married, equal earners), V (married, lower earner — combined with III), VI (second job). Class III/V combination maximises take-home pay for the higher earner but results in significant back-payment at year-end if not pre-paid. Class IV/IV with Faktor method is more equitable for couples with similar incomes.

How is Gewerbesteuer calculated for a German GmbH in practice?

Example calculation for a Berlin GmbH with €200,000 taxable trade income (Gewerbeertrag): Step 1: deduct €24,500 exemption (only for non-incorporated businesses — not applicable to GmbH). Step 2: multiply by 3.5% Steuermesszahl = €7,000 Steuermessbetrag. Step 3: multiply by Berlin Hebesatz 410% = €28,700 Gewerbesteuer payable. Gewerbesteuer is deductible from the Körperschaftsteuer base, reducing the net effective rate slightly.

What is the USt-IdNr. (VAT ID) and when is it needed?

The Umsatzsteuer-Identifikationsnummer (USt-IdNr.) is the German EU VAT identification number, format DE + 9 digits. It is issued by the Bundeszentralamt für Steuern (BZSt) upon application and is required for: intra-EU B2B supplies (enabling zero-rating), EU VAT reverse charge transactions, and EU MOSS/OSS filings. Every German VAT-registered company should apply for their USt-IdNr. immediately after Finanzamt registration.

What is the German Nachzahlungszinsen (back interest on tax) and how is it calculated?

The Finanzamt charges Nachzahlungszinsen (interest on deferred tax payments) under §233a AO. Following a BVerfG ruling in 2021, the rate was reduced from 6% to 1.8% per year from January 2019 onwards. Interest accrues 15 months after the end of the relevant tax year (i.e. from 1 April of the 2nd year after the tax year). This means tax underpayments discovered in a Betriebsprüfung can accumulate substantial interest over several years.