German VAT

Germany's VAT is established based on the regulations and directives issued by the European Union in Brussels. All 28 EU member states comply with the current VAT directive. The directive plays a supervisory role in the implementation of VAT and the formulation of some VAT rates.

The current VAT rate in Germany is 19% set by the German government. The VAT rate is decreased to 7% for food, books, healthcare, passenger transportation, newspapers, cultural and entertainment projects, as well as hotels. In case of a conflict between Germany's VAT law and the EU VAT directive, the EU VAT directive rules shall prevail.

German VAT Law

Germany's VAT law is formulated on the grounds of the EU VAT directive and is included in the Umsatzsteuergesetz’ (UStG) -1980 VAT law, which has undergone several modifications. Germany's VAT laws are implemented by the Federal Parliament and regulated by 16 federal states (Bundesländer).

German VAT registration

In Germany, EU and non EU companies can trade without establishing a local company, which is called a non-resident VAT transaction. There is no VAT threshold for non-resident merchants in Germany. The VAT number must be obtained before the start of taxable transactions.

Germany has strict regulations on VAT registration. The circumstances where VAT registration in Germany is usually required include:

Import items to Germany

Organize on-site activities, meetings, etc. in Germany and store spare goods for resale in German warehouses

Purchase goods in Germany and then resell them domestically

Sell goods from Germany to other EU countries

Remote sales to individuals in Germany, such as online retail

Generally speaking, German VAT registration takes about 3 weeks, depending on the situation. Taxpayers must register at the designated tax office in their respective country, for example: Italy - München II; Spain - Kassel-Hofgeismer.

German VAT enforcement

The recording and execution of business transactions in Germany is specifically regulated. These guidelines include:

German Receipts Requirements

Published German tax receipts

Foreign exchange statement

Credit notes and change records

Changes to previous report filling

Accounting records must be saved

German VAT rate

The standard VAT rate in Germany is 19%. The VAT rate is decreased to 7% for food, books, hotel accommodation, cultural services, and other service industries.

German VAT declaration

Companies with a German VAT registration number must regularly submit transaction and cost information for all goods subject to taxation. In Germany, it is generally submitted on a monthly basis. The declaration can be electronically submitted to the relevant tax office through the ELSTER system. Before the end of May of the following year, Germany also requests to submit an annual VAT declaration form.

Reporting transaction data: Intrastat and EC sales list

After the declaration, companies may be required to provide additional data and information.

In Germany, the Intrastat requires that when a company's sales (scheduling) and purchases (acquisitions) within the EU exceed the annual limit, the list must be submitted on a monthly basis. The EC sales list in Germany, also known as summary statement, specifically lists customer and transaction amount information. It needs to be submitted monthly, quarterly, or annually.

German VAT refund

If a foreign company sells goods in Germany but does not meet the standards for applying for a VAT registration number, or indirectly purchases products or services subject to taxation, the corresponding VAT is refundable.