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VAT, Customs & Excises

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VAT GUIDE IN GERMANY

GERMAN VAT GUIDE FOR BUSINESSES

Value Added Tax (VAT), known in Germany as “Mehrwertsteuer” (MwSt) or “Umsatzsteuer” (USt), is a consumption tax applied to most goods and services sold within the country. It is a key component of the German tax system and a significant source of government revenue.  Businesses operating in Germany are generally required to register for VAT, charge it on their sales, and remit it to the tax authorities.  

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VAT Rates

Standard rate: 19% applies to most goods and services.
Reduced rate: 7% applies to food, books, newspapers, public transport, hotel stays, cultural services.
Zero Rate: 0% applies to Intra-EU and international exports (conditions apply).

Who Needs to Register for VAT?

Resident businesses with taxable turnover above €22,000 (prior year) and €50,000 (current year expected).
 
Non-resident businesses making taxable supplies in Germany (no threshold).
 
Distance sellers to German consumers exceeding the €10,000 EU-wide threshold unless using OSS.
 
Online platforms and marketplaces facilitating sales.

VAT Obligations

Charge VAT correctly on taxable supplies.
 
File VAT returns (monthly, quarterly, or annually based on turnover).
 
Maintain VAT-compliant invoices and digital records (up to 10 years).
 
Submit EC Sales Lists (Zusammenfassende Meldung) for intra-EU B2B transactions.
 
Submit Intrastat declarations for goods movements over thresholds.
 
Reverse charge applies to certain B2B services and cross-border transactions.

VAT Deadlines

Filing Frequency:

    • Quarterly by default.

    • Monthly if prior year VAT exceeded €9,000 (or €7,500 until Dec 31, 2024).

    • Exempt if prior year VAT was below €2,000 (or €1,000 until Dec 31, 2024).

    • New businesses must file monthly for their first two years.

Deadlines:

  • Returns and payments are due by the 10th day after each period ends.

  • Payments must be made via bank transfer (cash not allowed).

Electronic Filing:

    • Filing is mandatory and done via the ELSTER Online-Portal.

    • Taxpayers must use a digital certificate and retain the transmission protocol to meet legal documentation requirements

VAT Refund

Non-established businesses not registered for VAT in Germany can recover input VAT through the Federal Tax Office (BZSt), to the same extent as VAT-registered businesses.

EU Businesses (under EU Directive 2008/9/EC): Eligible only if no taxable supplies were made in Germany during the refund period (excluding reverse charge).

Non-EU Businesses (under EU 13th Directive):

  • Must come from countries with reciprocity agreements (i.e., their country must also refund VAT to German businesses).
  • Fuel costs are not refundable.

Specific requirements:

  • Deadline: 30 June of the year following the invoice date (strictly enforced).
  • Claims must be submitted in German.
  • Must include a Certificate of Taxable Status (less than one year old).
  • An additional questionnaire may be required.
  • Application must be signed only by a legal representative.

General rule

  • Claim period: Minimum 3 months, maximum 1 year.
  • Minimum amounts: €1,000 for partial-year claims, €500 for annual or year-end claims.
 

Penalties for non-compliance

Late Registration:
 
No direct penalty, but late registration may lead to late filing, which can trigger penalties.
 
Late Filing & Payment:
 
Late payment: 1% interest per month on the outstanding VAT (rounded down to nearest EUR 50).
 
Late filing surcharge: Up to 10% of the assessed VAT, capped at EUR 25,000.
 
Enforcement fines: Up to EUR 25,000.
 
Additional fines may be imposed on responsible individuals for delayed filings or payments.
 
Errors in Returns:
 
No specific penalties unless fraud is involved.
 
Interest of 0.15% per month applies to late-paid VAT.

Common VAT Terms

  • USt (Umsatzsteuer) / MwSt (Mehrwertsteuer) ==> VAT
  • Steuernummer / USt-IdNr. ==> Tax number / EU VAT number (DE123456789)
  • Rechnung ==> Invoice
  • Zusammenfassende Meldung (ZM) ==> EC Sales List
  • Vorsteuer Input tax  ==> (VAT reclaimable on purchases)
  • Steuerschuldnerschaft des Leistungsempfängers ==> Reverse charge
  • ELSTER ==> Online tax portal for filings
  • Kleinunternehmerregelung==> Small business scheme (no VAT charged under €22,000 turnover)