Home›Guides›VAT in Germany — Complete Guide to Umsatzsteuer for Businesses
VAT in Germany — Complete Guide to Umsatzsteuer for Businesses
German VAT (Umsatzsteuer) is levied at 19% standard rate and 7% reduced rate under UStG. Every business with turnover above €22,000 must register. This guide covers registration, filing, invoicing, and EU rules.
German VAT — The Basics
Umsatzsteuer (USt) is Germany's value added tax, governed by the Umsatzsteuergesetz (UStG) and the EU VAT Directive (2006/112/EC). The standard rate is 19% and the reduced rate is 7% (food, books, public transport, cultural services). VAT is charged by VAT-registered businesses on taxable supplies and recoverable as Vorsteuer (input tax) on purchases. For B2B transactions, VAT is generally cost-neutral — it is a cash-flow and compliance issue, not a direct cost.
| Rate | Applies To | UStG Reference |
|---|---|---|
| 19% | Most goods and services | UStG §1, §12(1) |
| 7% | Food, books, newspapers, hotel accommodation, cultural events, public transport | UStG §12(2) |
| 0% | Intra-EU B2B supplies to VAT-registered businesses, exports outside EU | UStG §4 Nr.1a, §6a |
| Exempt | Financial services, insurance, medical, education, certain real estate | UStG §4 |
VAT Registration in Germany
All businesses exceeding the Kleinunternehmerregelung threshold of €22,000 annual turnover must register for VAT under UStG §2. Businesses below this threshold may voluntarily opt for VAT registration (Optionspflicht verzichten). Registration is triggered from the first day of the calendar year in which turnover exceeds €22,000. New businesses must also register if planned turnover in the first calendar year exceeds €50,000. Registration is via the Fragebogen zur steuerlichen Erfassung submitted to the competent Finanzamt via ELSTER.
- Kleinunternehmerregelung threshold: €22,000 (UStG §19(1))
- New businesses: register if planned year-1 turnover exceeds €50,000
- Steuernummer issued by Finanzamt — required on all invoices (UStG §14(4))
- USt-IdNr (DE + 9 digits) issued by BZSt — required for intra-EU B2B invoicing
- Voluntary registration below threshold possible — locks in for at least 5 years
VAT Filing Obligations — Voranmeldung and Annual Return
VAT-registered businesses must file Umsatzsteuervoranmeldungen (advance VAT returns) monthly or quarterly, depending on prior year VAT liability. If prior year VAT liability exceeded €7,500, monthly filing applies. Below €7,500, quarterly filing. Below €1,000, annual filing only. All filings are submitted via ELSTER by the 10th of the following month (monthly) or following quarter. An annual Umsatzsteuererklärung is filed by 31 July of the following year.
| Prior Year VAT Liability | Filing Frequency | Deadline |
|---|---|---|
| Above €7,500 | Monthly | 10th of following month |
| €1,000–€7,500 | Quarterly | 10th of following month after quarter end |
| Below €1,000 | Annual only | 31 July of following year |
| New business (year 1 and 2) | Monthly (mandatory) | 10th of following month |
New businesses are required to file monthly VAT advance returns in their first two calendar years of registration regardless of VAT liability — UStG §18(2). The Finanzamt may grant exemption from the Dauerfristverlängerung deposit requirement for the first year on application.
Invoicing Requirements Under UStG §14
German VAT invoices must contain 12 mandatory elements under UStG §14(4). Missing any of these makes the invoice non-compliant and the recipient loses the Vorsteuer (input VAT deduction) right. From 1 January 2025, e-invoicing (E-Rechnung) is mandatory for all B2B transactions between VAT-registered German businesses under the Wachstumschancengesetz.
- Full name and address of supplier and recipient (§14(4) No.1)
- Steuernummer or USt-IdNr of supplier (§14(4) No.2)
- Invoice date (Ausstellungsdatum) (§14(4) No.3)
- Unique sequential invoice number (§14(4) No.4)
- Description of goods or services supplied (§14(4) No.5)
- Net amount per VAT rate, VAT rate percentage, and VAT amount (§14(4) No.6–8)
- Total gross amount (§14(4) No.9)
- For B2B EU supplies: recipient's USt-IdNr and Hinweis on §4 Nr.1b UStG zero-rate
Intra-EU B2B Supplies — Zero-Rating and VIES
Goods supplied to a VAT-registered business in another EU member state are zero-rated (steuerfreie innergemeinschaftliche Lieferung) under UStG §4 Nr.1a if the supplier has proof of transport to the other EU state and the recipient's valid VAT number. Services supplied to EU businesses fall under the reverse charge mechanism (§13b UStG) — the recipient accounts for VAT in their country. The supplier must report all intra-EU supplies in the quarterly Zusammenfassende Meldung (ZM — EC Sales List).
| Transaction Type | VAT Treatment | Reporting Requirement |
|---|---|---|
| B2B goods to EU buyer | 0% if recipient VAT-registered + transport proof | Monthly/quarterly ZM filing |
| B2B services to EU buyer | Reverse charge — 0% from supplier | Quarterly ZM filing |
| B2C goods to EU consumer | 19% German VAT or OSS rules | OSS filing if above €10,000 threshold |
| Goods export outside EU | 0% with customs export declaration | No ZM required |
| Import into Germany | EUSt (import VAT) 19%/7% | Customs declaration at Zollamt |
Reverse Charge and §13b UStG
Under §13b UStG, the reverse charge mechanism shifts VAT liability from the supplier to the recipient for specific transactions including: services from non-resident EU suppliers, construction services (Bauleistungen) between contractors, gas/electricity supply, and certain domestic transactions. The German recipient self-assesses VAT at the standard rate and simultaneously claims it back as Vorsteuer — resulting in net zero cash impact for fully VAT-registered businesses.
- §13b(2) No.1: services from non-resident EU businesses — recipient accounts for VAT
- §13b(2) No.4: construction services between VAT-registered contractors
- §13b(2) No.5: supply of electricity and gas by foreign suppliers
- §13b(2) No.7: supply of emission allowances
- Reverse charge invoice requirement: "Steuerschuldnerschaft des Leistungsempfängers" notation required
One-Stop Shop (OSS) for E-Commerce
The EU One-Stop Shop (OSS) system, introduced from 1 July 2021, allows German-based businesses selling B2C goods and digital services to EU consumers to file VAT returns centrally with BZSt rather than registering in each EU member state. The threshold for triggering destination-country VAT on intra-EU B2C sales is €10,000 per year (combined across all EU states). Businesses above this threshold must either register for OSS or register for VAT in each customer's EU country.
The OSS does not cover B2B supplies (which use reverse charge) or non-EU sales (which may require VAT registration outside the EU). For imports from outside the EU valued below €150, the Import OSS (IOSS) scheme allows VAT to be collected at point of sale and declared centrally. Registration for OSS or IOSS is free at the BZSt portal.
Mandatory E-Invoicing from 2025
Under the Wachstumschancengesetz (April 2024), Germany is introducing mandatory structured electronic invoicing (E-Rechnung) for B2B transactions between German VAT-registered businesses. From 1 January 2025, all German businesses must be capable of receiving e-invoices in a structured format (EN 16931 standard — typically ZUGFeRD or XRechnung). From 1 January 2027, businesses with turnover above €800,000 must send e-invoices. From 1 January 2028, all VAT-registered businesses must send structured e-invoices.
- From 1 Jan 2025: all businesses must be able to receive structured e-invoices
- From 1 Jan 2027: businesses with >€800,000 turnover must send e-invoices
- From 1 Jan 2028: all B2B e-invoices mandatory regardless of turnover
- Accepted formats: ZUGFeRD 2.0+ (hybrid PDF+XML) and XRechnung (pure XML)
- DATEV and SAP both support ZUGFeRD and XRechnung from 2024
Frequently Asked Questions
What is the VAT registration threshold in Germany?
The Kleinunternehmerregelung exemption under UStG §19(1) applies to businesses with turnover of no more than €22,000 in the preceding calendar year and no more than €50,000 in the current year. Above these thresholds, VAT registration is mandatory. New businesses in their first year must register if planned turnover for the full calendar year will exceed €22,000.
What is the German VAT rate?
The standard Umsatzsteuer rate is 19% under UStG §12(1). The reduced rate of 7% applies to food, books, newspapers, cultural events, hotel accommodation, and public transport under UStG §12(2). Certain supplies are fully exempt (steuerbefreit) under UStG §4, including most financial services, insurance, medical services, and educational services.
How do I obtain a German VAT number (USt-IdNr)?
A German USt-IdNr (DE + 9 digits) is issued by the Bundeszentralamt für Steuern (BZSt). After completing the Fragebogen zur steuerlichen Erfassung with the Finanzamt, the Finanzamt forwards the request to BZSt, which issues the USt-IdNr separately. You can also apply directly via the BZSt online portal at bzst.de. The USt-IdNr is required on all intra-EU B2B invoices.
How often do I need to file VAT returns in Germany?
Filing frequency depends on your previous year's VAT liability. Above €7,500: monthly by the 10th of the following month. Between €1,000 and €7,500: quarterly. Below €1,000: annual only. New businesses must file monthly for the first two calendar years regardless of size. An annual Umsatzsteuererklärung is filed by 31 July of the following year in all cases.
Can I recover input VAT (Vorsteuer) on all business purchases?
You can recover input VAT (Vorsteuer) on all purchases used for VAT-taxable business activities. Input VAT on purchases used for VAT-exempt activities (e.g. financial services, rental of residential property) is not deductible. Mixed-use purchases require proportional allocation. Input VAT recovery requires a compliant VAT invoice meeting all 12 requirements of UStG §14(4).
Does reverse charge apply to services purchased from foreign suppliers?
Yes. Under §13b(2) No.1 UStG, German VAT-registered businesses purchasing services from non-resident EU suppliers must apply the reverse charge mechanism. The German recipient accounts for German VAT at 19% and simultaneously claims it back as Vorsteuer — net zero cash impact. The same rule applies under §13b(2) No.1 for services from non-EU suppliers if the recipient is a German business.
What is the Zusammenfassende Meldung (ZM) and who must file it?
The Zusammenfassende Meldung (ZM — EC Sales List) is a quarterly report filed with BZSt listing all intra-EU B2B supplies made by a German-registered business. It must include the VAT number of each EU customer, the total value of supplies, and the type of transaction. If monthly VAT filings apply, the ZM is filed monthly. The ZM is submitted via ELSTER or BZSt's online portal.
What are the mandatory elements of a German VAT invoice?
A compliant German VAT invoice under UStG §14(4) must include: full supplier name and address, supplier's Steuernummer or USt-IdNr, recipient's name and address, invoice date, unique sequential invoice number, description of goods or services, net amount, VAT rate, VAT amount, and gross amount. For intra-EU B2B supplies, the recipient's USt-IdNr and the zero-rate notation are also required.
Is e-invoicing mandatory in Germany?
Yes, in stages. From 1 January 2025, all German VAT-registered businesses must be technically capable of receiving structured e-invoices in EN 16931 format (ZUGFeRD or XRechnung). From 1 January 2027, large businesses must send e-invoices. From 1 January 2028, all B2B e-invoicing between German VAT-registered businesses is mandatory under the Wachstumschancengesetz.
What is the OSS scheme and when must a German business register?
The One-Stop Shop (OSS) allows German businesses selling B2C goods or digital services to EU consumers to file a single VAT return with BZSt covering VAT due in all EU member states. Registration is required when B2C intra-EU sales exceed €10,000 per calendar year across all EU countries combined. Without OSS registration, the business must register for VAT in every EU country where it has customers above local thresholds.
Can a non-resident business register for German VAT?
Yes. A non-resident business making taxable supplies in Germany (e.g. selling goods stored in a German warehouse, or providing digital services to German consumers) must register for German VAT with the competent Finanzamt. Non-resident businesses without a German establishment register with Finanzamt Bonn-Innenstadt (for EU businesses) or Finanzamt Hannover-Nord (for non-EU businesses). A fiscal representative (Fiskalvertreter) may be required for some non-EU countries.
What is the Kleinunternehmerregelung and is it worth opting out of?
The Kleinunternehmerregelung (UStG §19) exempts businesses with turnover below €22,000 from charging and filing VAT. While this simplifies administration, it also prevents recovery of input VAT on purchases. For businesses with significant investment spending or B2B customers (who can reclaim VAT), voluntary standard taxation (Regelbesteuerung) is often more advantageous. The opt-out binds the business for 5 years and must be declared in the Fragebogen zur steuerlichen Erfassung.
Work with the firm that knows Germany.
Licensed lawyers and accountants in Düsseldorf. Free 30-minute consultation, no commitment.
Book Free Consultation