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VAT Germany 2024
- Last update: 26.02.2024
- Published: 09.10.2020
- Read in: 5 min
Value Added Tax (VAT) in the local language is “Mehrwertsteuer,” and the acronym VAT is translated as “MWSt.” Similar to other EU member states, in Germany VAT is regulated not only by the EU VAT directive, but also the German VAT law, which makes it, in some aspects, unique and incomparable to the regulations applied in other countries.
If you want to find out what are the VAT rates in Germany or when the German VAT law obliges one to register VAT in Germany, you will learn it from this article!
In this article you will find answers to the following questions:
- What are the German VAT tax rates – standard rate of VAT Germany and reduced VAT rate in Germany?
- What are Mehrwertsteuer and Umsatzsteuer, and what is the difference between them?
- What are the requirements of German VAT invoices?
- When should one register for German VAT?
- What should I know about penalties and interests regarding German VAT?
- What are Intrastat thresholds in Germany?
- What are the German tax authorities and where Polish companies can acquire German tax number?
German VAT rates - standard VAT rate & reduced VAT rates in Germany
VAT in Germany has been in force since 1968. There are three VAT rates in Germany. The basic rate of the German Umsatzsteuer (VAT) is 19% and applies to most goods and services for which no reduced rates apply – 7% and 0%. However, due to the COVID-19 pandemic, the German government decreased the VAT rates to 16% (from 19%) and 5% (from 7%), which are currently in force until 31 December 2023.
|Indicated goods or services
|All goods or services other than those indicated below
Certain foodstuffs and their supply, Milk and certain milk products, Water supply (excluding bottled water), Medical equipment for the disabled, Certain domestic passenger transport, Intra-Community and international passenger transport for certain road, rail and inland waterway transport (up to 50 km), Books (excluding books the content of which is harmful to minors), E-books, Audiobooks, Newspapers and magazines (except those that contain content harmful to minors and advertisements of more than 50%), Admission to cultural events and cultural services, Hotel accommodation (short-term accommodation only), Certain entries to sports events, Social Services, Medical and dental care, Fireplace wood, Cut flowers and plants for decorative use and food production, Taxation of certain gold coins and jewellery, Delivery of food products
|Intra-Community and international transport (excluding road and rail transport and certain inland waterways)
The 19% VAT rate in Germany also includes construction services, which are quite a complicated aspect. Additionally, they are also subject to construction tax, which obliges the client to pay 15% of each invoice.
However, there is a possibility to avoid the obligation to pay the construction tax. In this case, one must apply for what is called a “Freistellung.” It is issued by the German tax authorities if the applicant can prove that they have no tax claims requiring security. Moreover, if the applicant for Freistellung is a foreign entity, they must also include a certificate of residence.
German reduced VAT rate changes in 2023
It’s worth noting that German authorithies introduced some changes regarding value added tax in 2023.
Zero rate now applies to photovoltaic systems when the installed gross capacity do not exceed 30 kilowatts and the systems are installed on or near private individuals’ properties or public buildings.
Moreover, Germany has reduced rate on hospitality, gas supplies (until March 31, 2024), catering services and restaurants (until December 31, 2023). Now they are subject to 7% VAT rate.
Steuernummer and USt-IdNr
In Poland, each company receives a tax identification number (NIP), which is used for VAT settlements with the tax office. In the case of intra-community transactions, the entrepreneur applies for VAT-EU registration. The VAT-EU number is the NIP number with a prefix PL – e.g. PL1234567890. The tax identification number in Germany is divided into Steuernummer and USt-IdNr (Umsatzsteuer – Identifikationsnummer).
The Steuernummer is needed for transactions with German companies and indexation at the tax office. This is equivalent to the Polish NIP number.
Umsatzsteuer – Identifikationsnummer (USt-IdNr), on the other hand, is required for intra-community transactions – the equivalent of the Polish VAT-EU number and commonly called the VAT DE number. It is a 9-digit number which follows the prefix DE. It is necessary for entrepreneurs who supply and purchase intra-Community goods to provide services for which the recipient has to pay tax or use services of companies from other countries—the application for the USt-IdNr. This number must be submitted when applying for VAT registration in Germany.
So everyone will have a Steuernummer, the same as the NIP number in Poland. However, USt-IdNr (VAT DE), just like VAT-EU in Poland, is issued if you apply for it. Merchants on Amazon or eBay platforms will additionally need the so-called 22FCertificate to confirm VAT registration in Germany.
German VAT invoice requirements Invoices
Invoices should contain the following basic information:
- Date of issue of the invoice,
- Unique number,
- Full supplier and customer addresses,
- Supplier’s VAT number,
- Full description of goods and services supplied,
- Details of the quantity of goods,
- Date of delivery (if different from the invoice date),
- The net value of the supply subject to taxation,
- Applied VAT rate,
- VAT amount,
- Details supporting zero VAT,
- Total gross invoice value.
When should I register for VAT purposes in Germany (and other member states of the European Union)?
The obligation for a foreign company to register for VAT in Germany, similar as in other EU member states, results from the foreign entity’s obligation to settle German VAT, which arises in a few situations:
- selling goods and services within Germany,
- importing and exporting goods to and from non-EU countries,
- warehousing goods in Germany and shipping them to recipients in other EU member states,
- importing goods into Germany from other EU nations,
- intra-Community distance sales of goods exceeding EUR 10,000 in value.
The last point refers to the unified threshold for all B2C sales to private recipients in other EU member states. Once it’s exceeded, entrepreneurs have an obligation to register for VAT in countries, where the products are sales to, and fulfill their VAT obligations there, which requires either a local registration and accounting for VAT or using the VAT-OSS procedure.
Need help with VAT matters or e-commerce accounting?
Reach out to us and tell us what causes the trouble, and our VAT Compliance specialists will be happy to help! In our offer you will find soulutions regarding VAT, VAT OSS and VAT UE matters such as registrations, settlements and returns, as well as e-commerce accounting assistance!Schedule a free consultation
German VAT returns
The German VAT is settled monthly, quarterly or annually, and the German VAT return period is decided by the tax office, based on the revenues from the previous year. If the entrepreneur did not exceed EUR 7,500 in the previous calendar year, they can submit the returns quarterly.
In the case of monthly and quarterly preliminary VAT returns, an annual VAT return is also required. In Germany, the intra-community transaction summaries (ZM-Meldung, translated into Polish by WDT/WNT) are submitted monthly until the 25th day of the following month.
The monthly VAT return must be submitted by the 10th day of the following month and the quarterly one by the 10th day of the month following the tax period.
The annual VAT return in Germany should be submitted by July 31 of the year following the tax year.
Penalties and VAT interest in Germany
Failure to settle the VAT on time may result in interest or penalties being imposed by the German tax office. For late payment, interest amounting to 1% of the required tax may be charged. The maximum amount of interest can be EUR 25,000.
The imposition of penalties for failure to submit a return on time depends to a large extent on the will of the tax office and the situation of the taxpayer. Justification for a one-off delay is something that can have a positive impact on the office’s decision and not to impose a penalty, while frequent delays will have a negative impact. The penalty imposed is usually between EUR 100 and EUR 500.
Intrastat in Germany
In addition to the VAT declaration, foreign companies operating in Germany may be required to submit Intrastat statistical reporting. It contains information about the import or export of goods between countries belonging to the European Union, as well as the transfer of their own goods to a warehouse located in another member state, for example in Spain.
The threshold for imports is 800,000 euros and the threshold for exports is 500,000 euros. Moreover, the reporting period for Intrastat is 10th day of the following month, and reports should be submitted monthly.
If you want to learn more, check what the Intrastat thresholds are in other EU countries in 2024.
Tax Office – Finanzamt
Due to the close business relations between Poland and Germany, a very large number of Polish companies are obliged to register and settle VAT in Germany. For this reason, 4 tax offices have been dedicated to serve Polish companies.
- Tax Office in Hameln – if the name of the entrepreneur, the name of the civil partnership or legal person starts with letters A to G;
- Oranienburg Tax Office – if the name of the entrepreneur, civil partnership or legal entity starts with letters H to L;
- Tax Office in Cottbus – if the name of the entrepreneur, the name of the civil partnership or legal person starts with the letters M to R;
- Noerdlingen Tax Office – if the name of the entrepreneur, civil partnership or legal entity starts with the letters S to Ź.
Do you want to register for VAT in Germany? >> Contact us
Germany VAT 2024 - summary
In Germany VAT is subject to the local law and the EU VAT directive, which imply when one should acquire German VAT number, settle VAT payable in this country, and regulate German VAT rates. Moreover, the regulations impose rules under which one’s VAT returns shall be submitted.
If your company will soon start taxable activities in Germany or you are currently a value added tax taxpayer but are not sure if you are settling the tax correctly, schedule a free consultation with us, and let’s discuss your German VAT Compliance. Our specialists have been dealing with VAT registrations, VAT OSS, and EU VAT, as well as declarations and automation of settlements for years.