VAT in Germany guide

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VAT in Germany is compliant to the European Union regulations. However, the standard VAT Deutsch (in other words, German) rate and some of the taxation policies are set by the German government. Most companies selling their goods or services in the country need to be VAT registered and have a VAT number Deutsch tax authorities issue. Please find everything about the German VAT in the article by 1stopVAT.

Registering for VAT in Germany

Registration to get a VAT number Deutsch (German) companies need to carry is obligatory after a company exceeds €22,000 taxable turnover in the last 12 months. However, foreign-run businesses that have a branch in Germany (except for online sellers) need to sign up for VAT Germany right after they make the first taxable sale. Foreign event organisers and companies that hold stocks in Germany-based warehouses and sell their goods to German customers are also subject to VAT. VAT number Deutsch (German) is required from distance sellers that have exceeded the threshold of taxable sales above 100,000€.

Small companies whose turnover in the previous year was below 15,000 and is not planned to exceed 50,000 in the upcoming year can avoid registering for VAT.

To receive a VAT number Germany operating businesses need to reach out to the local tax office and fill in a form called Fragebogen zur steuerlichen Erfassung. After registering for VAT number Germany operating companies must wait for 4 to 6 weeks until the number is issued and the registration process completed. If the company has not registered in time, it has to begin charging VAT from the moment of exceeding the registration threshold.

The obligation for VAT registration Germany might be triggered in different ways. Here is the the list of most common scenarios:

• Importing goods into Germany from non-EU countries;
• Buying and selling goods in Germany (excluding domestic reverse charge);
• Selling the goods from Germany to customers in other countries (B2B or B2C);
• Acquiring goods in Germany from another EU country (Intra-community acquisitions);
• Holdinging and storing inventory in Germany for selling, distribution or consignment;
• E-commerce sales of goods to German consumers, subject to Distance Selling VAT registration thresholds;
• Organising events in Germany where attendees or delegates are paying admission.

Germany VAT rates

The standard VAT tax in Germany is 19% of the sales value. Like in many other countries, Germany also facilitates a reduced VAT tax rate applied to a variety of goods and services, including some of the food items, water supplies, medical equipment, passenger transportation and similar. Reduced VAT tax Germany authorities set is 7%. Services that include intra-community and international transportation are subject to 0% VAT.

If you need to charge German VAT for your sales, you can use a German VAT calculator to calculate the final price. VAT calculator Germany can be found online and may also be useful when a person needs to apply for a VAT refund. 

German VAT for digital service providers

In case of digital services, B2B telecom services or broadcasting services, the place of supply is the where the recipient is located. No VAT Deutsch (German) should be charged, and reverse charge applies unless the supplier and customer are both established in Germany. For digital services, telecom services or broadcasting services supplied in a B2C context please refer to the section on the One-Stop Shop below for more information.

One-Stop Shop

On 1 July 2021 EU has introduced a so-called “One-Stop-Shop” (OSS) system which has replaced a previously applied “MiniOneStopShop” (MOSS) system. OSS has extended the scope of MOSS from digital goods and services to all goods and services sold B2C in the EU. OSS is an electronic portal that simplifies VAT compliance for online sellers, i.e., online businesses that sell goods and/or services in the EU are now only required to register for VAT in one EU country for all their B2C sales in the EU. If such sellers’ B2C sales in EU are above the applicable threshold, which is 10.000,00 EUR throughout the EU, businesses are liable to charge, collect and remit VAT in the Member State where their B2C buyers are located, instead of the Member State or country of their incorporation, i.e. online sellers have to apply the VAT rate of the Member State where the goods are dispatched or where the services are supplied. AS each EU Member State has an online portal where businesses can register for OSS and submit their VAT returns in one Member State for their B2C sales throughout the EU, it is estimated that VAT compliance costs will be significantly reduced. Registration in the OSS system is available for both – taxable persons established in the EU and outside the EU.

Late registration penalties

No specific penalty applies to late VAT registration in Germany. If, as a result of the late registration, a taxable person submits VAT returns belatedly, late-filing penalties may apply. Penalties are also charged for any late payments of VAT. In addition, late filing and late payment of VAT may be regarded as a tax fraud. 

Late-filing penalties may be assessed up to 10% of the VAT due, and late-payment penalties amount to 1% of the VAT due per month.

In the case of a voluntary disclosure to prevent punishment of tax fraud, a surcharge applies as follows:

• 10% of the tax amount if the respective amount exceeds EUR 25,000 up to EUR 100,000;
• 15% if the amount exceeds EUR 100,000 up to EUR 1 million;
• 20% if the amount exceeds EUR 1 million.

Fiscal representative Germany

The business which are selling in Germany do not have an obligation to appoint a fiscal representative in Germany.
1stopVAT can provide Global VAT/GST/Sales tax compliance services.

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