Annual guidance from Ministry of Finance on technical Value Added Tax issues
The Federal Ministry of Finance has published the annual VAT book, this one covering 2023. There is a separate Finance Ministry 2024/25 VAT Issues publication of the most important VAT regulations and regulations
Topics covered in this year’s edition include:
- UStG – German Value Added Tax Act
- UStDV Value Added Tax rebate
- EUStBV Import Value Added Tax Exemption
- Application of reduced VAT rates
- Input VAT deductions use
- EStAS
- Latest VAT return and filing procedures
The appendices contain the texts of other regulations to be observed in the 2023 taxation period, in particular the text of Directive 2006/112 / EC (VATSystRL), excerpts from the agreements on tax concessions in the NATO area, including the relevant BMF letters and important forms that are not included in the UStAE. This latest version of the Sales Tax Act is available for use on the website of the Federal Ministry of Justice or at www.gesetze-im-internet.de.
German VAT country guide
| Highlights | Local term | Umsatzsteuer (Ust); Mehrwertsteuer (MwSt) |
| VAT Rates - standard | 19% | |
| Rates news | Energy VAT cuts end March 2024 | |
| VAT Rates - reduced | 7%; 0% | |
| VAT number format | Germany VAT number - Steuernummer: 123456789. Intra-community trading VAT number (USt-IdNr) DE123456789 | |
| Registration threshold | €22,000 per annum; nil for non-residents.€10,000 for pan-EU digital services and goods OSS return. Intracommunity acquisitions €10,000 | |
| VAT Group | Yes | |
| VAT recovery foreign businesses | Yes, but requires reciprocity agreement for non-EU businesses | |
| Fiscal Representative | Not required for non-EU businesses except goods importers | |
| Currency | Euro €, January 1999 | |
| Administration | Introduction | VAT was introduced in 1968. It a founding member of the European Union |
| VAT laws | 2005 VAT Act; Umsatzsteuer-Anwendungserlass, UStAE (Application Decree;); and Umsatzsteuer-Durchführungsverordnung, UStDV (VAT Ordanance). Also EU VAT Directive which take supremacy as part of EU membership | |
| Tax Authorities | VAT registrations and ongoing relations is managed by federal tax offices. Import VAT (Einfuhrumsatzsteuer) is administered by Customs | |
| VAT Rates | Standard rate | 19% |
| Rates news | Hospitality VAT rise during COVID ended 31 Dec 2023; Gas VAT cut ends 31 March 2024. | |
| Reduced rates | 7%: cultural events; agriculture basics; art & antiques; certain livestock; hospitality (bars, restaurants; café); books; e-books; basic foodstuffs; gold; accommodation up to 6 months; medical care; newspapers; passenger transport; taxi <50 km; cultural events pharmaceuticals; rail; road transport; sea transport; social services; water; | |
| Zero-rated | Exports outside of the EU; transport on cross-border goods movements; Intra-community supplies; air services | |
| Exempt | Financial services; sales and rental of immovable property; medical supplies; gambling; welfare spend; education; social welfare | |
| Scope of VAT | Scope of VAT | Provision of domestic taxable goods and services; EU imports; intra-community acquisitions; Distance selling of goods B2C (OSS or IOSS); receipt of services or goods via the reverse charge |
| Time of supply | Goods & Services (general rule) | VAT is due in the period where the early of: transfer of control (goods) and completion (services);payment or agreement (meaning invoicing). Advance payment VAT is due in the period when paid (if earlier). |
| Reverse Charge | Earlier of: invoice issue; or month end of supply | |
| Continuous Services | Goods VAT due with each delivery. Services VAT due per contract and stages of delivery. | |
| Imports | VAT is due to clear the goods into free circulation into Germany. But it is possible to defer import VAT payments to the 16th of the following month. | |
| Goods on approval and return | As no specific rules, practically treated as general rule, above. | |
| Registration | VAT registration threshold | €22,000 per annum. May be exempted if prior year's turnover did not exceed €50,000. Nil threshold for non-resident business.€10,000 for pan-EU digital services and goods OSS return |
| Voluntary VAT registration | Yes, for resident businesses | |
| VAT number format | Germany VAT number - Steuernummer: 123456789. Intra-community trading VAT number (USt-IdNr) DE123456789 | |
| VAT Group | Yes for German-only companies. May be mandatory if two or more businesses are closely associated. Criteria includes: >50% cross shareholding; shared management or reporting; shared economic objectives. Shared liabilities. Parent company Organträger takes on VAT reporting for subsidiaries Organgesellschaften. Members may still have own VAT ID. Excludes holding companies. | |
| Non-residents | There is limited use of the reverse charge for non-German businesses, meaning VAT registration are required in most cases for goods. Registration is with the German regional office responsible allocated to the taxpayer's country of residency. IOSS or OSS for distance selling from third countries | |
| Fiscal Representative | Not obligatory for EU or non-EU taxpayers. Only German Steuerberateurs (qualified accountants) may act as a VAT agents. Non-EU importers or exporters from Germany may require indirect customs representative. IOSS B2C import VAT registrations requires 'Intermediary' for non-EU, and does not share client's VAT liabilities. | |
| Digital Services | France participates in the EU single One Stop Shop (OSS) VAT return for digital, telecoms and broadcast services. This was formerly the MOSS regime until 30 June 2021 | |
| Pre VAT registration costs | Permitted for set-up and preparation costs | |
| VAT Invoices | Issuance | Six months of supply. Intra-community supplies and reverse charge for services provided by EU resident by 15th of the month following the supply |
| Content | Unique invoice number; date; supplier name and address; VAT ID number Steuernummer; name and address of customer; Description, quantity of goods or services; date of supply (if different from invoice date) or advance payment; gross, VAT and net amounts; VAT rate; any exemptions or reverse charge | |
| E-invoices | German e-invoicing plans | |
| Simplified invoices | Yes, when not exceeding €250 including VAT | |
| Self-billing | Yes, with supplier and customer consent | |
| Retention of invoices | 10 years minimum in Germany. Electronic invoices must be stored securely electronically | |
| FX rules | Conversion into € by monthly rate provided by the Ministry of Finance | |
| Invoice corrections | Only by credit notes. | |
| Compliance | Right to deduct | Excluded: Partial deductions may be allowed if at least 10% business use. Business gifts below €35. |
| Call-off stock | Non-German EU businesses may opt to use Call-off stock VAT registration exemption when holding stocks in Germany under the full control of their customer following Jan 2020 'Quick Fix' EU VAT changes. Goods held by supplier in warehouse where eventual customer is not yet known (B2B or B2C) requires German VAT registration (Consignment Stock). | |
| Reverse Charge - B2B | The domestic reverse charge is mandated for supplies of: construction on property; supplies of gold and other precious metals; mobile phones; games consols; table computers above €5,000; scrap and used materials; carbon emission trading; building clearing services; natural gas and electricity. For non-residents, may apply on some supply and instal; | |
| Cash discounts | Where taken-up by customer, no requirement to issue credit note. Both sides adjust through their respective VAT returns. | |
| Bad debt relief | Yes. There is limited formal guidance on the requirements to demonstrate a trade debt is irrecoverable and therefore right to reclaim VAT remitted. | |
| Import VAT deferment | Yes. Under certain conditions, payment of VAT may be delayed to 26th of the second month following the importation | |
| VAT warehouse | Both customs bonded and VAT warehouses operated. Non-residents only need VAT registration is selling (not merely placing) goods in VAT warehouse) | |
| Supply & install | Installation of major imported fixtures and equipment may be treated as domestic goods supply by a non-resident supply, and therefore requiring a German VAT registration. If goods are of limited importance, then treated as reverse charge supply. | |
| Use and enjoyment services | VAT registration required of non-resident providing: hire of transport; hire of goods; financial services; consultancy services; broadcast and telecoms. | |
| Capital goods adjustment period | Movable property: ten years. Immovable property: five years | |
| Non-residents VAT recovery | EU businesses may reclaim VAT on services via their own tax authorities and an 8th Directive claim. Non-EU businesses must use a quarterly or annual 13th Directive claim if above €1,000 with invoices via BOP portal if their country has reciprocity | |
| VAT on Digital Services | Germany follows the EU VAT on digital services regime, introduced in 2015. This includes participation in the One-Stop-Shop (OSS) single EU VAT return (formerly MOSS until 30 June 2021) | |
| Live events | Provision of stand and similar services is considered as related to immovable property. A VAT registration is therefore required | |
| Distance selling threshold for goods | Nil. Following the EU ecommerce VAT package reforms from 1 July 2021, local German VAT must be charged on all sales by non-German EU e-commerce sellers shipping from within the EU. Imported distance sales not exceeding €150 liable to German sales VAT with IOSS return option | |
| Cash accounting scheme | Yes, with threshold of €800,000 per annum (since 2024) | |
| VAT registered cash tills | N/a | |
| Statute of limitations | Five years after the end of the tax year that an invoice/filing due | |
| Other | E-balance sheet required annually for residents. | |
| VAT Returns | Frequency | Non-residents and newly incorporated businesses monthly for first two year. Then quarterly if below €9,000 VAT per annum. Annual if VAT less than €1,000 per annum. Annual VAT returns (Umsatzsteuererklärung) |
| Filing method | Electronic only via Elster platform | |
| Deadlines (inc payments) | 10th of the month following the reporting period. Option for further month's grace if make advance payment of one eleventh of prior year's VAT liabilities. Annual VAT returns due by 31 March of following year | |
| VAT credits | Immediately refunded through VAT return | |
| Corrections | Corrective VAT return with four years' limit. Paper-based corrective returns permitted. | |
| Non-residents | As per resident taxpayer deadlines. | |
| Other filings | EC Sales Listing Zusammenfassende Meldungen for B2B supplies of goods and services. Monthly unless turnover does not exceed €50,000 in quarter - then quarterly. Filings due 25th of month following reporting period. Intrastat returns on goods movements due monthly by 10th of following month. Threshold: €800,000 arrivals; €500,000 dispatches. E-balance sheet required annually for residents. | |
| SAF-T | N/a | |
| Penalties & interest | 1% of VAT due per month penalty on late payments. Late filings may result in fine up to €25,000. Penalties of up to €5,000 per incorrect VAT invoice. Fines for fraud range from 10% to 20% of amounts involved where voluntary disclosure. | |
| B2C Distance Selling returns | Germany participates in the One-Stop-Shop pan-EU VAT return for distance selling, introduced in July 2021. |
