Comprehensive VAT Guide – Germany (2026)

1. Country Overview

2. Local VAT Term

3. VAT Rates

• Standard Rate – 19%: The majority of goods and services are taxed at the standard VAT rate of 19%. This includes typical business supplies unless specifically eligible for a reduced rate or exemption. [vatcalc.com]
• Reduced Rate – 7%: Germany levies a reduced 7% VAT on certain goods and services to support affordability and social policies. Examples of supplies taxed at 7% include: [vatcalc.com]
  • Basic foodstuffs and groceries (excluding beverages in restaurants) [vatcalc.com], [vatcalc.com]
  • Books, newspapers, and magazines (except those with primarily advertising content) [vatcalc.com], [avalara.com]
  • Cultural services and events, e.g. museum admissions, theater tickets [vatcalc.com]
  • Passenger transport (short-distance public transport, rail, and inland waterway travel) [vatcalc.com], [avalara.com]
  • Hotel accommodation (short-term stays up to 6 months) [vatcalc.com]
  • Certain medical supplies and devices, and goods for the disabled [vatcalc.com], [avalara.com]
  • Agricultural products (some agricultural inputs and livestock) [vatcalc.com]
  • Art, antiques, and collector’s items (qualifying supplies of art/collectibles)
    (This list is not exhaustive but covers key categories at 7%.) [vatcalc.com]
• Zero-Rated Supplies (0%): Some transactions are taxed at 0%, meaning they are taxable but the VAT is charged at 0% so suppliers can still recover input VAT. In Germany, exports of goods to outside the EU are zero-rated. Additionally, intra-Community supplies of goods (dispatches to VAT-registered buyers in other EU states) are taxed at 0%, provided the requisite evidence of removal is obtained. Certain international transport services (e.g. cross-border air transport of goods) can also be zero-rated. [vatcalc.com]
• Exempt Supplies: Germany’s VAT law designates specific activities as exempt (no VAT charged). Exemptions include:
  • Financial and insurance services (e.g. lending, insurance premiums) [vatcalc.com]
  • Sale and rental of real estate (immovable property) – although an option to tax is available in some cases. [vatcalc.com]
  • Medical and healthcare services provided by doctors and other health professionals. [vatcalc.com]
  • Education and training services (public education, certain vocational training). [vatcalc.com]
  • Social welfare and charitable services by approved organizations. [vatcalc.com]
  • Gambling and lotteries (subject to separate gambling taxes).
    These exempt sectors do not charge VAT on their outputs, but consequently cannot deduct input VAT related to those exempt activities. [vatcalc.com]

• COVID-19 Temporary Cuts: In response to COVID-19, Germany temporarily reduced the standard rate to 16% and the reduced rate to 5% in the second half of 2020. It also cut VAT on restaurant food to 7% (from 19%). These measures were time-limited but provided relief to hard-hit sectors. [vatcalc.com]
• Hospitality Rate Reforms: The VAT on restaurant and catering services (food) had been temporarily reduced to 7% during 2020–2023 as pandemic relief. A permanent change from 1 January 2026 will reinstate a 7% VAT rate for restaurant and catering food sales (making this reduced rate permanent rather than reverting to 19%). Beverages in hospitality remain at 19% standard rate. [vatcalc.com], [vatcalc.com] [vatcalc.com]
• Art and Collectibles: From 1 Jan 2025, sales of original art and collection pieces saw a VAT reduction from 19% to 7%, aimed at supporting the art industry. [vatcalc.com]
• Energy and Fuel: Germany has occasionally adjusted VAT on essential energy products (e.g. a temporary cut of VAT on natural gas to 7% during 2022–2023 to mitigate energy price inflation). Such changes are typically time-bound and sector-specific. [vatcalc.com]

4. VAT Number Format

• VAT ID (USt-IdNr.): Germany’s intra-EU VAT number format is the country code “DE” followed by 9 consecutive digits. Example: DE123456789. This is the number used for cross-border invoicing within the EU and for reporting in the European Sales List (EC Sales List). [vatcalc.com], [globalvatc…liance.com]
• Tax Number (Steuernummer): Separately, German businesses have a domestic tax number issued by the tax office, often formatted as a block of digits (which can vary by region). For example, a local Steuernummer might be written as 12/345/67890. This number is used in domestic filings. Sometimes the VAT registration is identified by this Steuernummer, but on invoices to German customers, either the Steuernummer or USt-IdNr. must be indicated. The VAT guide often references Steuernummer 123456789 as a generic format, though actual formats include separators. [vatcalc.com]

5. Registration Requirements

• Resident Businesses (Established in Germany): Small businesses whose annual turnover remains under €22,000 in the previous calendar year (and is not expected to exceed €50,000 in the current year) can qualify as Kleinunternehmer (small entrepreneurs) and are exempt from VAT registration. This means they do not charge VAT on sales nor recover VAT on purchases. However, if a business’s taxable turnover exceeds €25,000 per annum (threshold increased to €25k from 2024) it must register for VAT. In practice, a new business expecting to exceed €25,000 in its first year should register from the start, and an existing small business must register once it goes over the threshold. [vatcalc.com] [vatcalc.com], [avalara.com]
• Non-Resident Businesses: For businesses with no establishment in Germany, there is no turnover threshold – a nil threshold applies. This means any taxable supply in Germany by a foreign company generally triggers a VAT registration requirement from the first sale. Common scenarios include selling goods stored in Germany, organizing events or exhibitions, or certain B2C services. Germany has limited use of the reverse charge to relieve non-residents (unlike some countries); in most cases, foreign companies must register and account for German VAT on their sales of goods. (Some exceptions exist where the reverse charge mechanism can apply to foreign suppliers – see section 15 on reverse charge.) [vatcalc.com], [avalara.com] [vatcalc.com]
• Distance Selling into Germany: Prior to July 2021, EU sellers shipping goods to German consumers needed to register in Germany once annual B2C sales exceeded €100,000 (Germany’s former distance selling threshold). However, under the 2021 EU e-commerce VAT reforms, the €100k threshold was abolished and replaced by a pan-EU threshold of €10,000 (for all cross-border B2C sales of goods and digital services combined). Now, if an EU business’s total cross-border B2C sales exceed €10,000, they must charge VAT in the customer’s country. To simplify compliance, these sellers can use the One Stop Shop (OSS) – a single EU VAT return – instead of registering in every country. Thus, EU businesses selling goods online to German consumers can avoid a German registration by using OSS, provided they have no stock in Germany. If they opt not to use OSS, they must register in Germany when making any distance sales there (since the national threshold is effectively zero after 2021). [avalara.com] [vatcalc.com]
• Online Marketplaces: Since the e-commerce reforms, if using OSS, registration in Germany might not be needed for EU sellers. Non-EU sellers can use the Import OSS (IOSS) for low-value goods (≤ €150) to avoid German registration (see section 18 for distance selling rules). Direct sales of goods imported exceeding €150 or with inventory in Germany will require the non-EU seller to register in Germany (with a fiscal representative in some cases – see section 8).
• Voluntary Registration: Germany allows voluntary VAT registration even if a business is below the small entrepreneur threshold. A small business may opt out of the VAT exemption and register in order to charge VAT and reclaim input VAT (for example, if it has high input costs). Once opted in, the business must generally stay VAT-registered for at least five years (the small business exemption can’t be toggled frequently). [vatcalc.com]
• EU OSS/IOSS Schemes: Germany participates fully in the EU’s special VAT schemes:
  • Union OSS: EU-established businesses can use the One Stop Shop to report B2C supplies of services and intra-EU distance sales of goods in a single return, instead of multiple local registrations. Germany itself does not have a separate threshold aside from the EU-wide €10k for OSS. [vatcalc.com]
  • Non-Union OSS: Non-EU businesses supplying e-services to EU consumers can register for OSS in any one EU state (just one OSS registration) to cover all EU VAT – many choose Germany if they have a significant customer base there, but no local establishment is required for OSS.
  • IOSS: For imports of low-value goods (up to €150) sold to EU consumers, non-EU suppliers can use the Import One Stop Shop to charge German VAT at the point of sale and streamline importation. If a non-EU business uses IOSS for German customers, it doesn’t need a full German VAT registration. Note: Non-EU IOSS users are required to appoint an intermediary in the EU (analogous to a fiscal rep, but specifically for IOSS). [vatcalc.com]

6. VAT Grouping Rules

• Conditions: VAT grouping in Germany requires a relationship of financial, organizational, and economic integration between the entities. Typically, a parent company must directly or indirectly own over 50% of the voting rights in the subsidiary (financial integration) and exercise control over its management (organizational integration), and the companies must be economically interdependent (e.g. part of one enterprise). All members of the VAT group must have their place of management in Germany – a foreign company cannot be the head of a German VAT group. [taxopolis.eu] [taxopolis.eu], [taxopolis.eu]
• Formation: A VAT group is not automatic; it is established by meeting the criteria and usually notifying the tax office. When a VAT group exists, only the parent (the Organträger) files a consolidated VAT return for all group members. Intra-group transactions are not subject to VAT (they are disregarded as internal transfers). [taxopolis.eu], [taxopolis.eu] [taxopolis.eu]
• Liability: All members of a VAT group are jointly and severally liable for the VAT debts of the group. This means the tax authority can collect the group’s VAT from any entity in the group if necessary. [taxopolis.eu]
• Scope: Generally only corporate entities (e.g. GmbH, AG) can be part of a VAT group as subsidiaries. Partnerships may be included only in special cases. A branch or fixed establishment cannot form its own VAT group separate from its legal entity; branches in Germany are considered part of their foreign head office, so they can’t independently form an Organschaft. [taxopolis.eu]
• No Cross-Border VAT Grouping: Unlike some EU countries, Germany does not allow cross-border VAT groups. Each member must be a German entity or establishment. EU law does not permit cross-border grouping unless national law allows, which Germany’s does not.
• Recent Update: In late 2021/2022, there were discussions in Germany’s government about reforming the VAT grouping rules (for example, to possibly relax integration criteria or address recent court decisions). However, as of the latest update, no major changes have been enacted – the coalition government decided not to significantly modify Organschaft rules for now. Thus, traditional criteria still apply, though ongoing court rulings (including at the CJEU) continue to clarify specific aspects (e.g. whether partnerships can qualify under certain conditions, etc.). Businesses considering VAT grouping should consult current guidance and possibly rulings from the Federal Fiscal Court (BFH) on the topic.

7. VAT Recovery for Foreign Businesses

• EU Businesses (8th Directive Refund): If a company is established in another EU member state and has paid German VAT on business expenses (but has no German VAT registration), it can apply for a VAT refund under the EU 8th Directive procedure. The business submits an electronic refund claim via its home country’s tax portal (in its own language), by 30 September of the following year at the latest. The German authorities then process the claim and refund directly to the claimant. The claimant must provide copies of invoices over a certain amount and possibly additional documentation. Notably, the claimant must not have performed any taxable supplies in Germany (aside from perhaps reverse-charged services) during that period, or else the refund route is not available. [avalara.com]
• Non-EU Businesses (13th Directive Refund): Companies based outside the EU can reclaim German VAT under the 13th Directive (a special scheme akin to the 8th, but handled bilaterally). Key points for non-EU refunds:
  • Reciprocity: Germany will only grant VAT refunds to businesses from non-EU countries that offer reciprocal arrangements to German companies. For example, companies from the US, Canada, Japan, Switzerland, etc., can typically claim German VAT because those countries either have similar refund schemes or reciprocal agreements. If no reciprocity, the refund may be denied. [vatcalc.com], [avalara.com]
  • Procedure: Non-EU businesses must send a refund application directly to the German tax authority (Bundeszentralamt für Steuern – Central Tax Office) by June 30 of the following year (Germany’s deadline for non-EU refunds is 30 June). The application form (available from German tax authorities) needs to be submitted with original invoices and a certificate of business status (proof from the home tax authority that the claimant is a taxable person in their country). [avalara.com]
  • Thresholds and Periods: Refund applications can be annual or quarterly. If quarterly, the claimed amount must exceed €400; if annually (or the final part of year), it must exceed €50. Claims are usually processed within a few months. Germany pays approved refunds in Euros, to a bank account specified by the claimant. [vatcalc.com]
  • No Local Representative Required: Generally, Germany does not require a fiscal representative for refund claims, though the paperwork must be correct. Communication will be in German or possibly English.
• Scope of Refundable VAT: Foreign businesses can reclaim German VAT only on expenses that would be deductible if incurred by a VAT-registered German business. Typical refundable expenses include: trade fair costs, hotel and lodging, meals (with some limitations), transport, fuel, professional services, etc., provided those expenses relate to the business’s activities abroad. VAT on purchases that would be considered non-deductible or out of scope (e.g. personal expenses, entertainment without business purpose) will not be refunded. Also, if the foreign company was engaged in purely exempt activities (which if done in Germany would give no input tax credit), a refund can be denied.
• Restrictions: A foreign business cannot use the refund scheme to recover German VAT if it was or should have been registered for VAT in Germany during that period. In that case, the company must file a German VAT return to recover input tax. Additionally, foreign businesses providing only electronically supplied services to German consumers and using the OSS (Non-Union scheme) cannot reclaim German VAT via OSS; if they incur German VAT on costs with no registration, they’d use the 13th Directive route (assuming reciprocity).

• Since Brexit, UK businesses must use the 13th Directive process (with reciprocity) instead of the EU portal.
• Germany requires reciprocity for 13th Directive refunds; currently, many countries (including e.g. USA) have reciprocity, but businesses should verify if their country is eligible.
• Digitalization: Germany’s BZSt offers an online portal (BOP) for 13th Directive claims submission, improving efficiency. [vatcalc.com]

8. Fiscal Representative Requirements

• EU Businesses: If an entity from another EU member state registers for VAT in Germany, no fiscal representative is needed. The EU principle of mutual assistance allows direct dealing with the German tax office.
• Non-EU Businesses: Germany does not impose a blanket fiscal rep requirement on non-EU companies either. Non-EU businesses can register for German VAT and interact with authorities directly. However, in practice, a few scenarios may prompt the tax office to ask for a local agent or contact: [vatcalc.com], [avalara.com]
  • If the business has no EU presence and is dealing with complex import/export operations, they might need an indirect customs representative for import VAT and customs formalities. This is not the same as a fiscal rep for VAT compliance, but a customs broker who acts as importer of record. [vatcalc.com], [vatcalc.com]
  • Under the Import One Stop Shop (IOSS) scheme, a non-EU supplier is required to appoint an EU-established intermediary to use IOSS for B2C imports into the EU. This intermediary (often a tax provider) is somewhat analogous to a fiscal rep but only responsible for IOSS filings. Importantly, the intermediary in IOSS does not share VAT liability with the client under German law (unlike a traditional fiscal rep). [vatcalc.com]
• Qualified Tax Agents: If a company chooses to have someone handle VAT affairs, only qualified professionals (like German tax advisors/“Steuerberater”) are recognized to act on behalf of taxpayers in Germany. But this is voluntary – an administrative convenience rather than a legal requirement. [vatcalc.com]
• Liability: Since no fiscal rep is mandated, foreign businesses themselves remain fully liable for any VAT due. In absence of a formal rep, German authorities will correspond directly with the business (or its appointed contact person).
• Exception – Special Schemes: On the legacy mini One Stop Shop (MOSS) (pre-2021) and on OSS, non-EU companies had to choose a single member state to register (with fiscal rep in some countries). Germany did not require a rep for non-EU using MOSS (and now OSS) because the regulation itself doesn’t impose that if the company registers in an EU state. Therefore, a U.S. company could register for OSS in Germany without a fiscal rep.

9. Currency and FX Rules

• Invoice Currency: Businesses in Germany may issue invoices in any currency, but if VAT is charged, the VAT amount must be shown in euros on the invoice or the VAT must be able to be determined in euros. In practice, many invoices will list the net amount in foreign currency and either convert the VAT to euros or provide both currencies for clarity. [vatcalc.com]
• Reporting and Payment: For VAT returns, all amounts must be reported in EUR. If a taxpayer’s accounts are in a foreign currency, they must convert VATable amounts into euros for the return.
• Conversion Rates: The exchange rate to use is typically the official exchange rate published by the German Ministry of Finance (BMF) or the European Central Bank, applicable to the time of supply. In Germany it is common to use the monthly exchange rates set by the BMF (Bundesfinanzministerium) or the daily ECB rate. The law allows using the ECB rate or, by election, the customs exchange rates. Germany’s VAT Application Decree specifies acceptable sources for FX rates (often the monthly average rate published by BMF for a given currency). [vatcalc.com]
• Time of Conversion: If an invoice is issued in a foreign currency, the VAT can be converted using the rate on the date the tax becomes chargeable (tax point) or an average rate for the period, as allowed by German regulations. Most businesses use consistent methods approved by the tax office.
• Documentation: The invoice should ideally state the currency conversion used if VAT is converted. In any case, the business must maintain evidence of how rates were applied (e.g. keep the published rate table for that date).
• Example: A US company issues an invoice of $1,000 for a service subject to German VAT. They should convert $1,000 to EUR at the prescribed rate (say 1 € = $1.10, so €909.09) and then apply 19% = €172.73 VAT. The invoice could show $1,000 (net), €172.73 VAT, and total in EUR or both currencies. The German VAT return will include €172.73 output tax.
• Euro Adoption: Germany adopted the Euro in 1999 (cash in 2002), so there are no legacy currency issues in modern VAT filings. [vatcalc.com]

10. VAT Law and Legal Framework

• VAT Act (Umsatzsteuergesetz, UStG): This is the primary legislation governing VAT in Germany. It contains the rules on what is taxable, who is taxable, rates, exemptions, input tax deductions, obligations, etc. The UStG closely follows the provisions of the EU VAT Directive (Directive 2006/112/EC) but is structured as German national law. [vatcalc.com]
• VAT Implementation Ordinance (Umsatzsteuer-Durchführungsverordnung, UStDV): A federal ordinance that provides detailed regulations and examples for applying the VAT Act. It covers practical implementation aspects (e.g., certain invoicing details, administrative rules). [vatcalc.com]
• VAT Application Decree (Umsatzsteuer-Anwendungserlass, UStAE): This is an extensive official guidance issued by the Ministry of Finance interpreting the VAT Act and Ordinance. It is not law per se, but it reflects how tax authorities apply the law, and courts often consider it. The UStAE is updated regularly and compiles explanations and examples for various VAT scenarios. [vatcalc.com]
• EU VAT Directive: As an EU member, Germany’s VAT law is aligned with the EU VAT Directive 2006/112/EC (formerly the Sixth Directive). The Directive sets the framework (e.g., requiring a standard rate not below 15%, defining exemptions, etc.). Germany has implemented these rules in the UStG. In case of conflict, EU law takes supremacy over national law. German courts and authorities must interpret the UStG in light of the Directive and CJEU (European Court of Justice) case law. [vatcalc.com]
• CJEU Case Law: The decisions of the CJEU are binding in interpreting VAT law. Germany’s VAT rules are continuously influenced by CJEU rulings. For example, CJEU judgments have impacted German rules on VAT grouping, input VAT deduction (e.g., substance over form principles where right to deduct cannot be refused for mere invoice formalities if substantive conditions are met), or cross-border situations. [vatcalc.com]
• National Court Rulings: The Federal Fiscal Court (Bundesfinanzhof, BFH) is Germany’s highest court for tax matters, and its rulings shape VAT practice – for example, clarifying the definition of fixed establishments, or the treatment of complex supplies. Recent BFH and regional finance court decisions (e.g., regarding VAT on NFTs or treatment of combined supplies by hotels) can lead to changes in how the law is applied, even if the legislation text stays the same. [vatcalc.com]
• Legislative Updates: The German parliament amends VAT laws through Tax Acts. For instance, the Annual Tax Act or specific amendments (like the Tax Amendment Act 2025) introduce changes such as new rates, new rules (e.g., the digital tax administration changes effective 2026), or anti-fraud measures. These are typically preceded by draft bills and public consultation. Germany also must transpose new EU VAT Directive amendments (e.g., the “Quick Fixes” in 2020, the e-commerce OSS rules in 2021, etc.) into its national law. [vatcalc.com]
• Secondary Regulations: The Ministry of Finance occasionally issues official letters (BMF-Schreiben) that clarify particular VAT issues or implement court decisions. These letters are part of administrative guidance and often later incorporated into the UStAE.

11. Tax Authorities

• Federal Ministry of Finance (Bundesministerium der Finanzen, BMF): The BMF is responsible for federal tax policy and issues high-level regulations and guidance (like the VAT Application Decree, BMF letters, etc.). It also represents Germany at the EU level for VAT matters and is involved in legislative changes.
• Local Tax Offices (Finanzämter): Germany has a network of local tax offices, generally organized by state. VAT registration and ongoing compliance are managed by these tax offices. A German business deals with the Finanzamt of its locality. Each office handles VAT returns, payments, audits, and queries for taxpayers in its jurisdiction. [vatcalc.com]
• Special Tax Office for Foreigners: Non-resident businesses are assigned to specific tax offices that specialize in foreign registrations. For example, the Tax Office in Hanover (Hanover-Nord) and the Tax Office in Berlin-Neukölln historically have handled many foreign VAT cases. As of recent practice, the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt) in Bonn coordinates some aspects (like issuing USt-IdNr. for foreign applicants), but day-to-day filings go to the assigned regional office. [vatcalc.com]
• Customs Authorities (Zoll): The German Customs authority administers Import VAT (Einfuhrumsatzsteuer) at the point of importation. While import VAT ultimately is like any input VAT (recoverable on the VAT return if the importer is registered and the goods for taxable use), its collection and enforcement fall under customs law. Customs offices also implement special schemes like customs warehousing and liaise with tax offices on import VAT deferment accounts. [vatcalc.com]
• Tax Audits and Enforcement: German tax offices periodically audit businesses for VAT compliance. The authority can perform VAT audits (Umsatzsteuer-Sonderprüfung) focusing on VAT issues, or broader general audits. There are also surprise cash audits for businesses with cash sales (to check cash register compliance). The tax offices can assess additional VAT, impose penalties, or issue refunds.
• Appeals: If a taxpayer disagrees with a VAT assessment or decision, the first appeal is to the tax office (remonstration), and further appeal can be made to the finance courts, with final appeals to the BFH (Federal Fiscal Court).
• Central Coordination: The Federal Central Tax Office (BZSt) has some centralized roles:
  • Issuing VAT identification numbers (USt-IdNr.) – businesses apply to the BZSt to get a DE VAT ID (German companies typically get one automatically).
  • Administering EU cross-border refund claims from other EU businesses (for 8th Directive refunds) and processing 13th Directive refunds for non-EU claimants.
  • Compiling EU Sales List (ZM) data and forwarding it to other EU states.
  • Running the VAT OSS (for non-established businesses who choose Germany as their OSS member state).
• Intrastat: While Intrastat filings (for intra-EU trade statistics) are often submitted via the Destatis (Federal Statistical Office) portal, compliance with Intrastat is also monitored in conjunction with customs and tax authorities.

12. Scope of VAT

• Supplies of Goods within Germany: The provision of goods (transfer of right to dispose of tangible property) by a taxable person for consideration within German territory is subject to German VAT. For example, selling merchandise from a German store to a customer is within scope. [globalvatc…liance.com]
• Supplies of Services within Germany: The performance of services (anything that is not goods, broadly defined) by a taxable person for consideration in Germany is subject to VAT. The place-of-supply rules (aligned with EU rules) determine whether a service is deemed supplied in Germany. B2B services are generally taxed where the customer is (which could be outside Germany, by reverse charge), whereas B2C services may be taxed where the supplier is, unless specific rules apply. If under those rules Germany is the place of supply, the service falls in German VAT scope. [globalvatc…liance.com]
• Intra-Community Acquisition of Goods: When a German business (VAT-registered) acquires goods from another EU member state, it must self-assess German VAT on the intra-Community acquisition. For example, a German company buying goods from France will account for acquisition VAT in Germany (often with simultaneous input VAT deduction). A special threshold of €12,500 applies to acquisitions by certain non-taxable or partially taxable persons (like small businesses or exempt entities) before they count as taxable acquisitions. [globalvatc…liance.com]
• Importation of Goods: Imports (bringing goods into Germany from non-EU countries) are subject to Import VAT at German rates, collected by customs. The importer of record pays VAT (typically at 19% or 7% depending on the goods) at the border or via deferred payment. Import VAT is within the scope of VAT but governed by customs procedures. If the importer is a business, that import VAT can be reclaimed on the VAT return (similar to input VAT on purchases). [globalvatc…liance.com]
• Reverse-Charge Services and Certain Goods: Services supplied by a foreign provider to a German taxable customer fall under German VAT via the reverse charge mechanism (the German customer self-accounts for VAT). Also, certain supplies of goods with installation or certain cross-border scenarios can be pulled into German VAT via reverse charge (e.g., a non-established supplier selling goods in Germany to a VAT-registered customer triggers reverse-charge VAT on the customer, rather than the supplier registering – see section 15). [globalvatc…liance.com]
• Self-Supply (deemed supplies): Use of goods or services by a business for non-business purposes, or certain free-of-charge supplies, can be treated as taxable supplies (deemed outputs) under German law. For example, if a company takes goods out of inventory for private use, it may have to account for VAT on that withdrawal (to prevent untaxed final consumption). [globalvatc…liance.com]
• Territorial Scope: The scope of German VAT covers activities on German territory. This includes the mainland and certain German islands. Transactions in special zones like Heligoland or the Büsingen enclave are considered outside EU VAT territory, so different rules apply. But generally, if it’s in the Federal Republic of Germany (VAT territory), it’s within scope.
• Exclusions: Some transactions are outside the scope of VAT altogether (neither taxed nor exempt) – e.g. grants, donations (no supply), or certain statutory fines/compensation payments that are not consideration for a supply.

• Call-off Stock Simplification: As of 2020, if an EU supplier moves goods to Germany under a call-off stock arrangement (goods stored for a known customer who will take title later), Germany considers that not to be a taxable acquisition until the customer takes the goods. The foreign supplier need not register in Germany under these conditions (see section 15). [vatcalc.com]
• Use & Enjoyment Rules: Germany has implemented use-and-enjoyment provisions for certain services. This means if the normal place-of-supply rule would put a service outside the EU, but the service is actually used in Germany, it might be taxed in Germany (or vice versa). For example, hiring of movable goods or certain telecommunications/broadcast services provided by a non-EU supplier to German consumers might be taxed in Germany to avoid non-taxation. [vatcalc.com]
• Government Activities: Activities by public authorities are generally not taxed unless conducted in competition with private businesses. But when they do taxed activities, those fall in scope.

13. Time of Supply Rules

• General Rule (Goods & Services): For one-off supplies, VAT becomes chargeable at the earlier of:
  (a) the time the goods are delivered (transfer of risk/control) or the service is completed, or
  (b) when payment is received, or
  (c) when an invoice is issued (if invoiced earlier than delivery).
  In practice, the tax point is usually the date of delivery for goods or completion for services, unless an invoice is issued or payment made in advance. For example, if you deliver goods on 15 March and issue the invoice on 20 March (no advance payment), the supply’s tax point is 15 March (delivery date). If the customer paid on 10 March (advance) before delivery, then VAT on that amount is due when paid (advance payment triggers tax). Any remaining amount would be due at delivery. [vatcalc.com]
• Continuous Services: For ongoing services (like long-term consulting, leasing, or maintenance contracts) or continuous supplies extending over a period, Germany generally treats the service as supplied upon completion of agreed milestones or at least once a year. If a service is billed periodically (e.g. monthly), each period’s end triggers a tax point. The guidance says: continuous services are due per contract terms or stages; for services running beyond a year without intermediate billing, at least an annual tax point occurs. Continuous goods deliveries (e.g. ongoing supply via pipeline) are taxed with each unit delivered. [vatcalc.com]
• Imports: The time of supply for imports of goods is when the goods clear customs into free circulation in Germany. That is typically the moment of importation (the date on the import declaration). Import VAT is due then, though payment can be deferred under certain schemes (see section 15 on deferment). If using import deferment, the liability still arises at import, but payment is moved to the following month. [vatcalc.com]
• Intra-EU Acquisitions: The tax point for an intra-Community acquisition of goods is generally the 15th of the month following the month of dispatch from the other country, unless the supplier issues an invoice earlier. If an invoice is issued before that 15th, then the date of invoice is the tax point. (This follows the EU rule.) [avalara.com]
• Goods on Approval/Return (Consignment Sales): German law doesn’t have a special tax point rule for goods supplied on approval or consignment. In practice, such scenarios are treated under the general rule. This means if goods are sent on a “sale or return” basis, the VAT becomes due when the customer officially takes ownership or when the approval period expires and the sale is confirmed, since that’s effectively when the supply is made (or when an invoice is raised if earlier). [vatcalc.com]
• Advance Payments: If a customer pays (partially or fully) in advance of a supply, VAT on that amount is due at the time of payment receipt. The vendor must issue an advance payment invoice and account for VAT in that period. When the final supply happens, any remaining balance is taxed then. If an advance payment is made and later the deal is canceled (no supply), the supplier must refund and adjust the VAT accordingly. [vatcalc.com]
• Reverse Charge Services: For services where the reverse charge applies (i.e. the recipient accounts for VAT), typically the tax point is when the service is supplied or when the invoice is issued – whichever comes first. The German rule: the reverse-charge VAT is due at the earlier of the invoice date or the end of the calendar month following the supply. This aligns with EU rules requiring timely self-accounting if invoice is delayed. [vatcalc.com]
• Invoice Timing Impact: If an invoice is issued late (after the supply), Germany still requires that VAT be accounted for by the time of supply as per rules. German law mandates that invoices for certain cross-border supplies be issued by the 15th of the following month (see section 14), but even if invoicing is delayed, the tax point rules stand.
• Special Cases: For electricity, gas, heating, cooling supplies through networks, or telecom services that are continuous, tax points are usually determined by meter readings or billing periods. For vouchers, the tax point depends on voucher type: single-purpose vouchers trigger VAT on sale, multi-purpose on redemption.

14. VAT Invoicing Requirements

• Invoice Issuance Deadline: In Germany, a VAT invoice generally must be issued within six months after the supply of goods or services. However, certain transactions have a shorter deadline: [vatcalc.com]
  • For intra-Community supplies of goods (zero-rated B2B sales to EU customers) and for services where the customer is liable (reverse-charged services), the invoice must be issued by the 15th day of the month following the month of supply. This aligns with EU prompt invoicing requirements for cross-border transactions. [vatcalc.com]
  • It’s good practice to issue invoices as soon as possible. In B2C scenarios, issuing an invoice is generally not mandatory unless requested by the customer or required by specific law (though receipts still needed for record).
• Mandatory Invoice Contents: German law (UStG §14) specifies required elements for a proper VAT invoice: [vatcalc.com]
  1. Invoice date (date of issue).
  2. Unique sequential invoice number that identifies the invoice. [vatcalc.com]
  3. Supplier’s name and full address. [vatcalc.com]
  4. Customer’s name and full address. [vatcalc.com]
  5. Supplier’s VAT identification number (USt-IdNr.) or tax number. For cross-border B2B within EU, the supplier’s USt-IdNr is required; domestic invoices often show the Steuernummer or USt-IdNr. [vatcalc.com]
  6. Customer’s VAT ID number – required for intra-EU supplies (where the customer is in another EU country) or other reverse-charge situations. In domestic B2B, not mandatory unless reverse charge applies.
  7. Description of goods or services supplied. The description should clearly indicate what was supplied, quantity of goods or scope of services. [vatcalc.com]
  8. Date of supply (delivery or service completion) if different from the invoice date. For example, if delivery was on 28 Feb but invoice on 5 Mar, the invoice must state “Leistungsdatum: 28.02.2026”. [vatcalc.com]
  9. Net amount charged for the goods/services, per rate or item.
  10. Applicable VAT rate(s) (e.g. 19% or 7%) for each line or category.
  11. VAT amount payable, in EUR. [vatcalc.com]
  12. If any VAT exemption or reverse charge applies, a reference to the provision or phrase indicating that (e.g. “VAT exempt according to UStG §4…”, or “Reverse charge – UStG §13b applied”). [vatcalc.com]
  13. In case of advance payment invoices: if an advance is invoiced, later the final invoice must reference the advance invoice.
  These elements cover most invoices ≥ €250. Missing elements can render an invoice invalid for input VAT deduction until corrected.
• Simplified Invoices: For small amounts, Germany allows simplified invoices. If the invoice total (incl. VAT) does not exceed €250, it can omit some details. A simplified invoice (like a cash receipt) needs at least: issuance date, supplier name/address, description of goods/services, gross amount and VAT rate or a statement that VAT is included and rate. Customer name/address isn’t required on such small bills. [vatcalc.com]
• Electronic Invoicing: Electronic invoices (e.g. PDF or structured format) are allowed without paper originals. Since 2011, Germany no longer requires qualified electronic signatures or EDI specifically – e-invoices are treated equally to paper as long as authenticity and integrity are ensured (commonly via business controls). [globalvatc…liance.com]
  • B2G mandatory e-Invoicing: As of late 2020, business-to-government invoices in Germany must be electronic (in a specified format such as XRechnung) for federal contracts, under the E-Government law. States (Länder) have also adopted B2G e-invoicing requirements. [globalvatc…liance.com]
  • Upcoming B2B e-Invoicing Mandate: Germany is phasing in a B2B e-invoicing mandate from 2025 to 2028. Starting 1 Jan 2025, all German businesses must be able to receive structured e-invoices. By 2027, the plan is that issuance of e-invoices will become mandatory for domestic B2B supplies. The accepted formats follow the EU standard (EN 16931), including XRechnung, ZUGFeRD (hybrid PDF/XML) etc.. Non-compliant invoices (not meeting format standards) will not qualify for input VAT deduction without extra steps. Notably, purely foreign businesses (no German establishment) and B2C transactions are proposed to be exempt from mandatory e-invoicing. This initiative is awaiting full legislative implementation, but EU approval has been granted for Germany to mandate e-invoicing until end of 2027. [vatcalc.com], [vatcalc.com] [vatcalc.com]
• Self-Billing (Gutschrift): Germany allows self-billing, where the customer issues the invoice on behalf of the supplier (common in certain industries or inter-company transactions), provided both parties agree in advance. Such invoices must be marked “Gutschrift” (credit note, which in German context means a self-issued invoice) and contain all required elements. The timeline and content requirements are the same; the supplier must ensure the invoice is accounted for. [vatcalc.com]
• Invoice Retention: Invoices must be kept for 10 years in Germany. This applies to both issued and received invoices. Electronic invoices must be stored electronically in a way that guarantees data integrity and accessibility for the period. Records must be located in Germany, or access provided (subject to some allowances for EU storage with notification). [vatcalc.com]
• Invoice Corrections: If an invoice is found to have mistakes (e.g., missing info or wrong amount), the correction typically must be made by issuing a credit note or a corrected invoice. The guidance says formal invoice corrections are usually done via credit notes referencing the original invoice. Germany does allow true corrected invoices (re-issuing the invoice with corrections) and these, if fully compliant, retroactively secure input VAT deduction (per recent case law). However, practically many choose to issue a credit for the wrong invoice and create a new one. [vatcalc.com]
  • If a VAT amount was overcharged, simply issuing a credit note (negative invoice) to adjust down is necessary, otherwise the extra VAT might still be owed.
  • If undercharged, a supplementary invoice is needed for the difference.
• Digital Signature: Not required. Electronic invoices do not need a qualified digital signature to be accepted since 2011 changes. But if used, it’s one method to ensure integrity.
• Language and Currency: Invoices can be in any language, but tax authorities may request translation. Key terms like “Invoice” or “Credit note” ideally in German or easily understood. Currency can be foreign, but VAT amount in EUR (as noted in section 9).

15. Compliance and Deductions

• Input VAT can be deducted on the VAT return for the period in which the invoice is received and the supply made (and when one holds a proper invoice).
• Exceptions: If purchases are used to make exempt supplies (e.g., financial services, real estate leases without opting to tax), then input VAT is not deductible or only partially deductible. Germany allows partial deduction if a purchase is used for both taxable and exempt outputs (proportional recovery via a pro-rata “Vorsteuerabzug” percentage).
• Minimal Business Use: Germany applies a rule that if an asset is at least 10% business-used, it can be treated as a business asset and qualify for input tax deduction to that extent. If business use is below 10%, the item is considered fully non-business (no deduction). [vatcalc.com]
• Non-deductible items: Input VAT on certain expenses is blocked by law, e.g., on business gifts over €35 in value per recipient per year (small gifts under €35 are deductible). Also, 100% entertainment (non-business) costs are not deductible, and for mixed use like meals, only 70% of input VAT on client business meals is effectively deductible due to income tax rules. [vatcalc.com]
• Formal Invoice Requirements: A valid invoice is required to deduct VAT. If an invoice is missing required elements (VAT ID, address, etc.), the deduction can be denied until corrected. Recent case law (CJEU and German courts) emphasizes that substantive right to deduct should not be lost for mere formal errors if they can be remedied. [vatcalc.com]

• The movement is not treated as a taxable transaction in Germany at the time of transfer. Instead, when the customer takes the goods, it’s an intra-EU supply from the supplier’s country to Germany (zero-rated from supplier’s side) and an acquisition by the customer in Germany.
• No German VAT registration is required for the foreign supplier if all conditions of the call-off stock regime are met. Conditions include the customer being known and VAT-registered in Germany, the goods being taken within 12 months, proper record-keeping, etc. [vatcalc.com]
• If goods are sent to German stock without a specific customer (general consignment stock for multiple customers or later sale), the simplification does not apply. This becomes consignment stock, meaning the foreign supplier must register and report a deemed intra-EU acquisition and local supply when goods are sold from stock or otherwise after 12 months. [vatcalc.com]
• Avalara example: Call-off stock in Germany– single customer control, no registration; Consignment stock – under supplier control for multiple buyers, registration required. [avalara.com]

• Construction services (including building and repair work on real property) provided to a business – the recipient must account for VAT (to combat fraud in subcontracting).
• Supplies of certain goods prone to fraud: e.g., sales of scrap metal, waste and used materials, certain precious metals and gold, industrial metal trading, etc., are under reverse charge. [vatcalc.com]
• Electronics: Supplies of mobile phones, integrated circuits (microchips), tablets, and game consoles over a threshold (e.g., if an invoice exceeds €5,000) are reverse-charged to the business customer. [vatcalc.com]
• Energy trading: Supply of electricity and gas by non-local traders, and emissions trading (carbon credits), fall under reverse charge. [vatcalc.com]
• Building cleaning services (janitorial services) – reverse charge to the business recipient. [vatcalc.com]
• Hiring out of labor (staff provision in construction) – also included.
• Telecommunication services (to resellers) – possibly listed as well by German law.
• Additionally, if a foreign (non-established) supplier provides certain goods with installation in Germany to a VAT-registered customer, the transaction might be under reverse charge instead of supplier registering (especially if the goods value is incidental – see “supply & install” below). [vatcalc.com]

• Germany’s rule: If a non-resident supplies goods and also installs or assembles them in Germany, this is considered a supply of goods within Germany. The liability can shift to the recipient via reverse charge only if the supplier is not established in Germany and the recipient is a VAT-registered business. So often the German customer will reverse charge such supply+install contracts. [vatcalc.com]
• If the installation is significant, and the customer is not VAT-registered (or it’s B2C), then the foreign supplier must register and charge German VAT as it’s a local supply. Germany’s guidance says if the goods’ value is “of limited importance” relative to installation, treat as service (likely reverse charge), otherwise treat as goods delivery (supplier might have to register). [vatcalc.com]

• The supplier initially invoices full amount + VAT.
• If the customer takes the discount, the payment will be less; no need for the supplier to issue a credit note for the discount. Both parties simply adjust the VAT in their books according to the actual amount paid. [vatcalc.com]
• In practice, the customer will deduct 2% off net and 2% off VAT when paying. In the VAT return, the supplier will declare output VAT on the reduced amount actually received, and the customer claims input VAT on the same reduced amount. German rules allow this adjustment without extra paperwork, as long as it’s clearly provided for in the invoice and contract. [vatcalc.com]
• If the customer doesn’t take the discount (pays after 10 days), full VAT stands.

• The supplier must demonstrate that the debt is definitely uncollectible. Typically, this means exhausting legal dunning procedures, or the client is insolvent/bankrupt.
• There isn’t an explicit statutory waiting period, but in practice proving irrecoverability often can only occur after e.g. 1+ year or insolvency proceedings. Some German guidance suggests waiting at least a reasonable period and taking steps to collect. [vatcalc.com]
• The supplier will adjust VAT in their VAT return (negative output VAT). There is limited formal guidance on bad debt VAT in Germany, making it a cautious area. In practice, companies often write off and adjust after an official insolvency notice or multiple unsuccessful collection attempts. [vatcalc.com]
• If subsequently the customer does pay (after VAT was reclaimed), the supplier must then output the VAT again.

• Businesses can apply for a deferred payment account with customs. This allows them to pay import VAT on the 16th of the following month after import. So imports in March would have VAT due April 16, rather than at the border in March. This is essentially an extension, easing cash flow. [vatcalc.com]
• Additionally, there’s discussion/proposal for postponed accounting (where import VAT is directly declared on the VAT return as input and output, like many countries do). As of the latest, full postponed accounting (immediate settlement on the return without paying at customs) is not yet implemented in Germany, but the deferred payment to the next month is available for approved importers. [vatcalc.com]
• Guarantee requirements: To get deferred payment, companies often need to provide a customs guarantee or have AEO status.

• Customs Warehouses vs VAT Warehouses: Customs warehouses are for non-EU goods (no import VAT until release). VAT warehouses in Germany can apply to some EU goods, but they are not common. Items like certain precious metals or goods intended for export can be stored and traded VAT-free in a VAT warehouse per UStG §4g.
• Non-resident sellers: If a foreign company is only storing goods in a customs or VAT warehouse in Germany and not actually selling them domestically (just transferring through), no German VAT registration is necessary. Only when goods are removed for domestic sale does VAT apply. [vatcalc.com]
• If goods are sold while in warehouse to a German buyer who then removes them, the buyer may become liable for the VAT (depending on setup). This is a niche scheme; most businesses rely on customs suspension rather than VAT warehousing.

• If a foreign supplier sells machinery and sends technicians to install it in Germany, German law often deems it a supplied good in Germany, because the item becomes operational on site. That would normally force the foreign supplier to register and charge German VAT.
• Reverse charge exception: However, if the foreign supplier is not established in Germany and sells to a VAT-registered German business, the obligation can shift – the German business self-accounts for VAT (reverse charge). Many B2B supply-and-install falls under this, saving the foreign supplier from registration. [vatcalc.com]
• If the supply-and-install is to a private person or non-VAT entity, the foreign supplier must register and charge VAT because reverse charge can’t apply.
• German guidance indicates if the goods value is minor relative to the installation service, the transaction might be treated as a service (so general B2B rule – reverse charge if foreign supplier). If the goods are the main element, treat as goods (local supply). [vatcalc.com]
• In any case, supply with install usually triggers a German tax point at completion of installation (as that’s when the supply finishes).

• For instance, leasing of movable tangible property to private customers: By default, if a non-EU lessor leases equipment to a German (private), the service might be outside scope. Germany’s rules likely make it taxable in Germany if the equipment is used in Germany (use-and-enjoyment rule).
• Telecommunications, broadcasting, electronic services: EU rules already tax B2C where the customer is, so use-and-enjoyment is largely built in.
• Financial services to non-EU customers: Typically exempt when done domestically, but if a German entity provides financial services to someone outside EU, those are outside scope (not taxed) and thus normally input VAT would be deductible (treated as if taxed). Germany’s use-and-enjoyment might ensure certain services are treated as taxable if used in Germany even if buyer is foreign (though in finance, probably not applied since it’s exempt anyway).
• The reference in vatcalc suggests: “VAT registration required of non-resident providing: hire of transport; hire of goods; financial services; consultancy; telecom/broadcast.” This implies if a foreign firm provides these to German consumers (which normally might not be taxed due to place of supply being outside EU for non-EU supplier), Germany’s rules make them taxable in Germany (so the foreign firm would need to register). In practice, the use & enjoyment rule in EU directive allows members to tax certain services used in their country even if general rule says otherwise. Germany likely uses this for things like car rentals: If you rent a car in the US but use in Germany, they may want it taxed in Germany. [vatcalc.com]

• For movable capital assets (equipment, machines, vehicles etc.), the adjustment period is 5 years. The year of first use plus four additional years are monitored. If in any of those years the proportion of taxable use changes by >10 percentage points, an adjustment is made (1/5 of the VAT per year). [datenbank.nwb.de]
• For immovable property (real estate) and its components, Germany uses a 10-year adjustment period. Buildings are watched for nine years after the first year. [datenbank.nwb.de]
• Example: A company buys a machine in 2026, deducts full VAT. In 2028, it starts using the machine 50% for exempt output. Then for 2028 and remaining period, it must adjust (pay back) half of 1/5 of the VAT per year for the years of changed use.
• If a capital good is sold before the end of the adjustment period and was originally used for taxable purposes, a final adjustment may be required to account for the remaining years as if used for a new purpose (the sale might be taxable or exempt affecting that calculation). [datenbank.nwb.de]

16. VAT Recovery for Non-Residents

• They must apply via their home country’s tax portal by September 30 of the year following the refund year. [avalara.com]
• The claim must specify the German VAT amounts by invoice, with commodity codes and descriptions.
• Germany may ask for copies of invoices (especially for invoices ≥ €1,000, or ≥ €250 for fuel).
• The minimum claim amounts: €400 for a quarterly claim, €50 for an annual claim.
• Germany’s tax authority (BZSt) will review and typically respond within 4 months (extendable to 8 months if asking for more info). Approved refunds are paid to the claimant’s bank account.
• The claimant must have undertaken no taxable supplies in Germany in that period (except those under reverse charge or certain transport services).
• If the business missed the Sept 30 deadline or had a German VAT registration, it cannot use this route.

• Reciprocity: Germany requires that the non-EU country offers comparable refund rights to German firms. Countries like Norway, Switzerland, Japan, Canada, etc. qualify. Some countries (e.g., maybe China or others with no VAT refund practice) might not. [vatcalc.com], [avalara.com]
• Application: The non-EU business submits a paper or PDF application (German Form “Antrag auf Umsatzsteuer-Vergütung”) to the German BZSt. This typically must be done by June 30 of the following year. [avalara.com]
• Original invoices and a certificate of tax status from their home country must accompany the claim.
• Timeframe: Germany also tries to handle these within 6-8 months. Communication is typically by mail or the BZSt’s online portal (BOP) which now accepts electronic submissions for 13th Directive claims.
• Periodic claims: Non-EU can also do quarterly claims (min €400) or annual (min €50).

17. VAT on Digital Services

• General Rule (B2C E-Services): If a business (anywhere in the world) provides electronically supplied services to a private consumer in Germany, the place of supply is Germany – German VAT is due. Examples: downloads of software or music, streaming, online gaming services, etc. The standard VAT rate 19% usually applies (or 7% if a specific exception, but most e-services are standard-rated).
• Before 2015: Such services provided by non-EU companies often went untaxed or taxed at origin. Since Jan 1, 2015, the EU requires taxation at destination (where the customer is). Germany implemented this so that even a US company selling e-books to Germans must charge German VAT.
• Mini One Stop Shop (MOSS) 2015-2020: To avoid requiring countless registrations, the EU had the MOSS scheme for digital services. Non-EU companies could register for MOSS in one EU country to cover all sales to EU consumers. EU companies would use the non-union MOSS for their cross-border digital services. Germany allowed non-EU providers to register with BZSt under MOSS. VAT due to Germany would be paid via that single return.
• OSS from 2021: In July 2021, the MOSS expanded into the One Stop Shop (OSS). Now OSS covers not just digital services but also all B2C services to EU countries and intra-EU distance sales of goods. The non-Union OSS is for non-EU businesses selling digital services to EU consumers. They can choose any EU state to register; if they choose Germany, they file OSS returns quarterly to the German BZSt declaring German VAT (and other EU VAT) due. [vatcalc.com]
  • EU-based providers of digital services to consumers in other EU countries use the Union OSS (likely through their home country’s portal).
• Threshold: Small EU businesses have a €10,000 pan-EU threshold under which their cross-border digital services can be taxed at home. If a German small business provides < €10k of digital services to other EU countries, it can just charge German VAT and treat them as domestic (using home rule). Above that, OSS or local registration in each country is needed. Non-EU businesses have no threshold – from first sale to EU they need OSS or local VAT.
• VAT Rates on Digital Services: e-Services (like streaming, downloads) are generally standard-rated (19%) in Germany. E-books and e-newspapers have been a point of change: since December 2018, Germany applies the 7% reduced rate to e-books, e-newspapers and e-periodicals (aligning digital publications with physical print). Purely digital products like software, apps, platform fees remain 19%. [vatcalc.com]
• Compliance using OSS: OSS greatly simplifies compliance – if a company uses OSS for digital services, it does not have to issue German VAT invoices (for B2C, an invoice isn’t mandatory) and it pays the collected German VAT to its OSS home country, which forwards it to Germany. Germany in turn receives OSS payments from other countries for German consumers.
• If Not Using OSS: If a provider does not opt for OSS (non-EU provider must though, otherwise it has to register in every member state, which is impractical), it would have to register in Germany once it has any B2C sales here – which is seldom done now given OSS availability.
• Telecom & Broadcasting: These are treated like e-services in terms of place-of-supply. So a non-EU telecom providing phone services to German tourists would have to account for German VAT (usually via OSS as well).
• B2B Digital Services: If digital services (cloud services, software, etc.) are sold B2B to German businesses, the reverse charge generally applies under normal B2B service rules – the German customer self-assesses. So the special schemes are only for B2C.
• Domestic Digital Services (B2C): If a German business sells digital services to German consumers, that’s just normal domestic VAT – 19% on their German VAT return.

18. Distance Selling Rules

• Pre-2021 EU Distance Selling Regime: Before July 1, 2021, an EU business selling goods to German consumers (with goods shipped from another EU country) had to charge their home VAT until annual sales to Germany exceeded €100,000 (Germany’s distance selling threshold). Once above that, the seller was required to register for VAT in Germany and charge German VAT on German sales. Germany’s threshold was relatively high (€100k, whereas many countries had €35k). [avalara.com]
  • Germany utilized €100k (like Luxembourg, Netherlands) as allowed by EU law.
• 2021 E-Commerce VAT Changes: These rules changed significantly on July 1, 2021. The individual country thresholds were abolished and replaced by a low EU-wide threshold of €10,000 (for all distance sales and digital services combined). Effectively, any distance sales from an EU country to Germany are subject to German VAT from the first euro, unless the seller’s total cross-border B2C sales in the entire EU are below €10k and they opt to tax in their home country. In practice:
  • For small sellers < €10k cross-border, they can still charge home VAT on German sales.
  • Above €10k, they must charge German VAT on German deliveries.
  • One Stop Shop (OSS): The seller can avoid multiple registrations by using the Union OSS to report the German VAT from those distance sales (see section 17 and 5). If using OSS, no need for a German VAT number; the VAT is settled via home country OSS filing. [vatcalc.com]
  • If not using OSS, the seller must register in each country where they sell (thus in Germany) and file local returns.
• Effectively, from 2021 onward, the practical distance selling threshold in Germany is zero if OSS is used, because OSS kicks in after €10k EU-wide which most active sellers exceed quickly, and once in OSS, you charge local VAT on all countries’ sales. [vatcalc.com]
• Non-EU Sellers (goods): If a non-EU business sells goods to German consumers:
  • If goods are stored in the EU (e.g., in a fulfillment center in Germany or elsewhere in EU), and sold locally, that non-EU seller likely must register in Germany (or use OSS via an intermediary if they have an EU establishment for OSS).
  • If goods are shipped from outside the EU directly to the consumer, those are imports. For low-value goods ≤ €150, the seller can use the Import One Stop Shop (IOSS) to charge German VAT at sale and streamline customs (so the customer gets goods tax-paid). If IOSS is not used, the buyer might pay import VAT upon delivery. For goods > €150, normal import VAT and possibly customs duties apply; the seller might still decide to act as importer and thus eventually register in Germany if doing significant volumes not covered by IOSS.
• OSS Participation: Germany participates in OSS for distance sales and encourages sellers to use it. For instance, a French company selling €50k/year of products to Germany would, after 2021, register in OSS France, charge 19% German VAT on those sales, and include them in quarterly OSS returns. German consumers benefit from being charged the correct German VAT and no surprise fees on delivery. [vatcalc.com]
• Domestic “Versandhandel”: Within Germany itself, there’s no threshold – German VAT always applies. The term distance selling typically concerns cross-border.
• Marketplaces and Liability: Germany also implemented EU rules that make certain online marketplaces liable for VAT on sales by non-EU sellers under some conditions. If a non-EU seller isn’t properly registered, marketplaces can be held responsible to collect VAT. Also for imports ≤€150, if IOSS is used often the marketplace (like Amazon, eBay) might act as the deemed supplier collecting VAT.
• Distance Services vs Goods: (Note: distance selling rules specifically refer to goods. Services to consumers – see “VAT on Digital Services” – are governed by separate place-of-supply rules.)

• Old threshold (until June 2021): €100,000 per year for sales to Germany from a given EU country. [avalara.com]
• New threshold (from July 2021): €10,000 EU-wide, after which OSS/German VAT required. [vatcalc.com]
• Post-2021: Essentially no threshold per country; sellers use OSS once they go above €10k EU sales to keep compliance manageable. [vatcalc.com]

• If seller is in IOSS, they collect German VAT at sale, declare via monthly IOSS return in their chosen EU state. German import VAT is exempted in customs using the IOSS ID.
• If not, standard import process means either consumer pays or seller still might need to arrange import (especially if seller promises DDP delivery, they’ll need a German/EU VAT registration to pay import VAT and then possibly charge it to customer).

19. Cash Accounting Scheme

• Eligibility: This scheme is generally available to small businesses and certain professionals. Specifically, businesses with annual turnover up to €600,000 could opt for cash accounting (threshold recently raised to €800,000 as of 2024). The threshold increase was part of relief measures to benefit more small businesses. [vatcalc.com]
  • Additionally, freelance professionals (like doctors, lawyers, accountants) can use cash accounting regardless of turnover under certain conditions (as they may not be required to keep double-entry books by German Commercial Code).
  • Farmers under the flat-rate scheme, etc., might also inherently use cash basis due to special rules.
• Mechanism: Under cash accounting, VAT on sales is only due when you actually receive payment from your customers, rather than when you issue an invoice. Similarly, input VAT is claimed only when you pay your suppliers. This contrasts with the standard method where VAT is due based on invoice date (time of supply) even if not yet paid. [vatcalc.com]
• Advantages: Cash accounting improves cash flow for small businesses because they don’t have to remit VAT to the tax office before actually collecting it from their customers. It also means they only claim input VAT once they pay, preventing them from taking credit if they haven’t paid the supplier yet.
• Application: A business must apply to the tax office to use cash accounting, usually by indicating it in the VAT registration or by letter. Typically, if you meet criteria (turnover under threshold or are a type of professional), the tax office grants it.
• Exclusions: Businesses that are required to keep double-entry books (e.g. due to legal form or high turnover) and determine profits via balance sheet accounting cannot use cash accounting. Also, if you exceed the turnover threshold, you must switch to accrual method from the next year.
• Process: If using cash accounting, when filing the VAT return, you include output VAT for invoices paid by customers in that period, and input VAT for invoices you paid that period. Unpaid invoices are carried over.
  • If a customer partially pays, you account for that portion’s VAT.
  • It’s important to track accounts receivable and payable carefully, to know what’s been paid.
• Transition: If one exits the scheme (e.g. exceeding turnover or voluntarily switching), there are transition rules to avoid double taxation or non-taxation (like you might have to account for outstanding receivables at switch-over).
• Other Simplification (Small Business Scheme): Note that the cash accounting scheme is different from the small business VAT exemption (Kleinunternehmer). A small business may either be entirely VAT exempt (not charging VAT at all if under €22k), or if they opt/need to be VAT registered, they can then choose cash accounting if under €800k. €800k is a high threshold – even many medium businesses can qualify.
• Recent Increase: As noted, the threshold was €600,000 and increased to €800,000 from 1 Jan 2024 per a recent tax law change. This expansion allows more mid-sized businesses (especially those making on-account payments or having slow-paying clients) to benefit from cash basis VAT.
• Not for Imports/Exports: Cash accounting doesn’t delay the requirement to report intra-EU acquisitions or import VAT, which are governed by their own rules, though the credit on import VAT in input side would similarly only occur when it’s paid (immediate at import typically).

20. VAT-Registered Cash Tills (Point-of-Sale Requirements)

• Technical Security Device (TSE): Since 1 January 2020, all electronic cash register systems in Germany must be equipped with a certified Technical Security Device (Technische Sicherheitseinrichtung, TSE). The TSE is a tamper-proof module (hardware or cloud-based) that records each transaction and digitally signs it to prevent later manipulation. This ensures the integrity of sales records used for VAT reporting. [fiscal-req…ements.com]
• Receipt Issuance: Businesses are required to issue a receipt for every sale (upon completion of each transaction), whether the customer asks or not. This is to create a paper trail for audits. The receipt can be paper or electronic but must include key info (date, amount, VAT, TSE signature info, etc.). [fiscal-req…ements.com]
• Data Retention: The POS system must store transaction data in a format (DSFinV-K, a standardized digital format) that can be exported for audit. The records from the TSE should be kept for the standard retention period (10 years). [fiscal-req…ements.com]
• Who is Affected: These rules apply to most businesses with cash transactions (retail, gastronomy, etc.). Some very small operations might use open cash boxes (permitted if no electronic system, but they must then do manual record books). If using any electronic device to tally sales, it must comply.
• Certification: The TSE must be formally certified by Germany’s Federal Office for Security in Information Technology (BSI). There was a phase-in; because not enough certified TSE solutions were initially available, full enforcement started later in 2020 and into 2021. Now it’s fully in force.
• Penalties: Non-compliance (like not using a TSE when required, or failing to provide receipts) can lead to fines. There are random inspections by tax authorities (even unannounced “Kassen-Nachschau”) to ensure businesses comply with cash register rules.
• Not Directly a VAT law but Related: The requirement stems from the tax code and “Law for Protection against Manipulation of Digital Records” rather than the VAT Act, but it is aimed at safeguarding VAT and income tax integrity for cash businesses. So while VAT law doesn’t specifically say “cash tills must have TSE”, it’s a legal requirement that indirectly affects VAT compliance.
• No Special VAT Rate or Scheme on Tills: Unlike some countries, Germany doesn’t have a separate “cash register VAT scheme” or different rates. This is purely about compliance and record-keeping.
• Point-of-Sale Systems Obligation Summary:
  • Secure each transaction with TSE timestamp/signature. [fiscal-req…ements.com]
  • Provide customer with a receipt (which contains among other things, a TSE transaction number or QR code).
  • Maintain digital records for audit in standard format.
  • Register the POS system with local tax authorities (some states required notification of each device).
• VAT Registered Cash Tills: The phrase likely refers to the fact that businesses registered for VAT who use cash registers must follow these ordinance rules. There isn’t a separate VAT certificate for tills, just the general compliance requirement.
• Recent updates: There were initial extensions (e.g., allowed usage of non-TSE cash registers purchased before 2020 until end of 2022 if certain conditions, etc.), but by 2026 all should be compliant. There’s discussion of linking cash registers to tax authorities in real-time (some countries do this), but Germany hasn’t gone that far yet – it relies on the secure local storage and potential audit retrieval instead.

21. Statute of Limitations

• General Assessment Period: The standard statute of limitations for German tax assessments, including VAT, is 4 years after the end of the calendar year in which the tax return was filed (or the statutory filing deadline, if later). In practice, this often means up to 4 years after the year in question. However, there are some specifics:
  • If a VAT return for 2026 is filed in 2027 (on time by July 31, 2027 for annual return, say), the 4-year period starts end of 2027, so the tax office could issue changes until end of 2031.
  • Germany sometimes phrases it as “until the end of the fourth year after the year in which the tax arose.”
• Extended Periods for Evasion or Serious Cases: If tax evasion (fraud) is involved, the statute is extended to 10 years from the end of that year. If a taxpayer has negligently understated tax significantly, it can be extended to 5 years (some sources cite 5 for gross negligence). So: [vatcalc.com]
  • Evasion (intentional fraud): 10-year period.
  • Gross negligence: likely 5-year period (though officially 5 years is often for simple negligence above minor threshold).
• Interest and Revisions: Even within limits, any additional tax assessed comes typically with interest if beyond the original due date. Germany has an interest system (0.5% per month historically, now adjusted to ~0.15% per month from 2019 due to high interest ruling).
• Taxpayer Amendments: A taxpayer can generally amend a filed VAT return within the statutory period (4 years) if an error is found, by submitting a correction or asking for change. There is also an obligation to self-disclose if they find significant underpayment.
• Finality: After the statute lapse, the assessment is final and normally cannot be changed. However, if a return was never filed, the statute may not start, leaving it open indefinitely until filed or discovered.
• VAT Refund Claims: If a taxpayer paid too much VAT and wishes to claim a refund (e.g., discovered an input VAT they missed), they also are bound by the limitation period – typically 4 years to adjust a return and claim the additional refund.
• Special Cases: The issuance of a VAT assessment notice or audit can interrupt the limitation period. If an audit is initiated, that often stops the clock until the audit is done and new assessments issued. The law (AO – Fiscal Code) has detailed rules on suspension or extension if under investigation.
• Recent mentions: The summary from vatcalc notes “Five years after the end of the tax year that an invoice/filing due” as statute of limitations. This likely merges the idea that practically, VAT filings being annual, the authorities often have 4 full years after the year ends (which feels like end of 5th year from the year of the transaction). [vatcalc.com]
  • For example, 2026 VAT year ends Dec 31, 2026. 4-year period ends Dec 31, 2030, which is indeed five years after 2026 (since counting 2027,28,29,30 – 4 full years).
• EU Requirements: EU law requires at least a 4-5 year record keeping and assessment window for VAT, which Germany meets/exceeds.

22. VAT Return Filing

• Filing Frequency:
  • Monthly Returns: New businesses must file monthly for the first two years. Thereafter, if a business’s prior year VAT payable (net VAT after deducting input tax) was more than €7,500, it continues to file monthly. [vatcalc.com] [avalara.com]
  • Quarterly Returns: If prior year net VAT was between €1,000 and €7,500, the business can file quarterly. [avalara.com]
  • Annual Returns Only: If prior year net VAT was less than €1,000, the tax office may allow annual returns (with no interim filings). This is uncommon except for very small operations or those mainly making zero-rated supplies. [vatcalc.com]
  • Non-resident businesses are typically categorized similarly: most start with monthly filings. [vatcalc.com]
• Due Dates:
  • Monthly and quarterly preliminary VAT returns (Umsatzsteuervoranmeldung) are due by the 10th day of the following month. For example, January’s VAT return is due February 10. [vatcalc.com]
  • However, businesses can obtain a one-month extension (Dauerfristverlängerung) by applying and, for monthly filers, paying a special prepayment (1/11 of last year’s VAT) as security. With this extension, the due date becomes the 10th of the second following month – e.g., January’s return due March 10. [vatcalc.com]
  • Annual VAT Return (Umsatzsteuererklärung): This is a comprehensive return summarizing the year, due by July 31 of the following year (if not using a tax advisor) or by end of February of second following year (if using a tax advisor and extension). Vatcalc mentions annual returns due by March 31, but that may refer to older deadlines or specific cases. Currently the deadline is end of July (subject to extension policy changes). [vatcalc.com]
• Submission Method: All VAT returns must be filed electronically via the ELSTER system (or via approved API software). Paper filings are not accepted except in rare hardship cases. Non-residents also use ELSTER (they can register for it without German ID via a special process). [vatcalc.com]
• Payment Deadlines: Payment of any VAT due is also generally required by the filing deadline. So if a January return shows €1,000 due, that €1,000 must be paid by Feb 10 (or Mar 10 if extension was granted). Late payment triggers interest or late fees.
• Excess Credits: If the return shows a VAT credit (refund), Germany will refund it immediately upon processing, usually by bank transfer, unless the account is being audited or the tax office asks to carry it forward. Generally, refunds are issued promptly (within a few weeks) if no issues. [vatcalc.com]
• Annual Return purpose: The annual return reconciles the sum of monthly/quarterly filings to actual annual figures, and declares some additional info (like prepayments made, certain adjustments). Any remaining balance is settled then. It’s also where certain adjustments (like pro-rata calculation, etc.) are finalized.
• Corrections: If errors are discovered in a filed return, one can submit a corrective VAT return for that period within the statute of limitations. Minor errors may alternatively be corrected in a subsequent period’s return (if discovered soon after). But formally, one is supposed to amend the specific period. Vatcalc notes that paper-based corrective returns are permitted, meaning you could send a manual letter adjustment if ELSTER period is locked, but now ELSTER also lets you amend earlier periods electronically. [vatcalc.com]
  • If an audit occurs, adjustments from audit will be reflected in an amended assessment by the authorities.
• Non-Resident Filing: Non-resident taxpayers follow the same frequency rules and deadlines as residents. They also file via ELSTER. There is usually a specific tax office assigned to handle their account, but the process is the same. [vatcalc.com]
• Language: Returns are filed in German. However, figures are numbers so it’s not problematic. The interface might be German.
• Pre-filled Returns: Germany generally does not provide pre-populated VAT returns. Businesses must enter their figures. However, some transactions like OSS or domestic reverse charges do not show up pre-filled; it’s all on the taxpayer.
• Special Prepayment: Monthly filers taking the extension must pay a special advance equal to 1/11 of previous year’s net VAT by the end of the previous year. This is then credited against the December return of current year (effectively January’s due in Feb). This system is unique to Germany’s extension arrangement.
• Late Filing and Payment: If a return is filed late, tax offices may impose a late filing penalty (typically 0.25% of owed tax per month of delay, minimum €25, often automatically after certain time) and charge late payment interest (usually ~0.5% per month, recently adjusted). If consistently late, they might demand monthly filing even if threshold for quarterly.
• Other: Very large companies might have to do additional reporting or or join a VAT split payment pilot (not in Germany yet, but conceptually).

23. Other Filings (EC Sales List, Intrastat, etc.)

• European Sales List (ESL) / Zusammenfassende Meldung (ZM):
  When a German VAT-registered business supplies goods or certain services to other EU VAT-registered businesses, it must file an EC Sales List. The ESL reports details of the zero-rated intra-Community supplies of goods and any services provided under the general B2B rule where the customer is taxed (e.g. reverse-charge services) to EU customers.
  • Frequency: The default filing for Germany is monthly. However, if the quarterly value of intra-EU sales does not exceed €50,000, the business may opt to file quarterly. If the threshold is exceeded in any quarter, monthly filing becomes required. [vatcalc.com]
  • Due Date: The ESL is due by the 25th day of the month following the reporting period. So, for January (or Q1) ESL, due Feb 25. [vatcalc.com], [avalara.com]
  • Content: The ESL includes each customer’s VAT ID and the total value of goods or services supplied to them in that period.
  • Penalties: Late or incorrect ESLs can incur fines up to €5,000, and persistent non-compliance can raise audit flags. [avalara.com]
• Intrastat Declarations:
  Intrastat is separate from VAT but linked, for capturing intra-EU trade statistics. Businesses must file Intrastat reports if their intra-EU imports (arrivals) or exports (dispatches) of goods exceed certain thresholds:
  • Thresholds: Currently, the annual Intrastat threshold for dispatches (exports from Germany to EU) is €1,000,000, and for arrivals (imports from EU to Germany) is €3,000,000. These thresholds can change; they were €500k/800k in earlier years but updated due to EU regulation changes in 2022. [vatcalc.com], [avalara.com]
  • Frequency: If threshold exceeded, monthly Intrastat returns are required.
  • Due Date: Typically 10th working day of the month following. Vatcalc says by 10th of following month, which is in line. [vatcalc.com]
  • Content: Intrastat asks for details on goods traded – commodity code, value, weight, quantity, partner country, etc.. It is filed via the online portal provided by Destatis (Statistical Office). [avalara.com]
  • Relation to VAT: Values in Intrastat should correspond to those in VAT records (but valued slightly differently, e.g. including freight). There’s no tax due here, but it’s mandatory if thresholds are hit. Penalties exist for non-filing, though enforcement historically is mild unless significantly non-compliant.
• Annual VAT Return: (Already covered in section 22, but it is another required filing beyond periodic returns.)
  • Due: by July 31 (or extended). This is in addition to monthly/quarterlies.
• SAF-T / Digital Reporting:
  Germany currently does not have a SAF-T (Standard Audit File for Tax) requirement. Unlike some countries that require periodic submission of detailed electronic records, Germany uses audits to obtain data when needed. However, as e-invoicing comes in, a form of digital reporting will increase. [vatcalc.com]
  • There is something called E-Bilanz – an electronic balance sheet submission. Companies must submit their annual financial statements (balance sheet and P&L in a prescribed XBRL format) electronically to tax authorities. Vatcalc notes “E-balance sheet required annually for residents”. This is part of corporate tax compliance but complements VAT in verifying numbers. [vatcalc.com], [vatcalc.com]
  • Some industries have special reporting (e.g., insurance premium tax declarations, etc., but not directly VAT).
  • Germany is considering real-time reporting as part of the EU “ViDA” initiative, but nothing implemented yet beyond e-invoicing plan.
• Other EU filings:
  • OSS Returns: If a German company uses OSS for cross-border B2C, it must file quarterly OSS returns with the BZSt separately from its domestic VAT return.
  • IOSS Returns: Similarly, any IOSS returns (monthly) if applicable.
  • These OSS/IOSS returns are pan-EU filings, not specific to Germany’s domestic obligations, but relevant if the business engages in those sales.
• Local Listings: Germany doesn’t require domestic purchase or sales listings like some countries do. There’s no requirement to list all domestic invoices regularly except if asked in an audit.
• VAT Audit Data Requests: While not a routine “filing,” businesses should be aware of GDPdU/GoBD rules requiring them to provide electronic records in audits. This often entails giving tax auditors a data file of all transactions in a certain format.

• EC Sales List for reporting EU sales to businesses, typically monthly (or quarterly) by the 25th. [vatcalc.com]
• Intrastat declarations for large traders, monthly by the 10th, capturing EU trade stats. [vatcalc.com]
• Annual summary return (USt-Jahreserklärung).
• No SAF-T or other routine digital file submission (aside from E-Bilanz for financials). [vatcalc.com]
• Businesses engaged in cross-border activities should ensure to meet these additional reporting duties to avoid penalties and ensure smooth cross-border VAT compliance.

24. Penalties and Interest

• Late Filing Penalty (Verspätungszuschlag): If a VAT return (preliminary or annual) is filed late, the tax office may charge a late filing penalty. For the annual VAT return, this is often automatically assessed if not filed by deadline (especially after recent rule changes):
  • Typically up to 0.25% of the assessed tax per month of delay, with a maximum of €25,000. The tax office often sets a fixed penalty within that bound. [vatcalc.com]
  • For monthly/quarterly returns, a penalty is less automatic, but persistent lateness can trigger one.
  • If no tax is due (or a refund), a penalty might be smaller or waived, but not guaranteed (they can still impose a flat amount for non-zero cases).
• Late Payment Surcharge (Säumniszuschlag): If VAT is not paid by the due date, a late payment surcharge accrues. This is usually 1% of the outstanding tax per month or part thereof. Importantly: [vatcalc.com]
  • It’s calculated on the amount due and starts shortly after the due date (there’s typically a 3-day grace, then the surcharge for that month is 1%).
  • This is more of a penalty than true interest; it doesn’t depend on actual interest rates.
• Interest on Tax (Nachzahlungszinsen / Erstattungszinsen): For assessments that result in additional tax due or refunds after some time:
  • The German Fiscal Code provided interest at 0.5% per month (6% per year) for periods of delay beyond a certain grace (usually after 15 months from year-end). However, in 2021, Germany’s Constitutional Court deemed 6% p.a. too high given low interest environment. Legislation adjusted it to 0.15% per month (1.8% p.a.) effective for interest periods from 2019 onwards.
  • This interest is applied when, for example, a significant refund is paid out much later or an audit finds underpaid VAT.
  • It is separate from the 1% late payment surcharge; both can apply in scenarios.
• Incorrect Invoice Penalty: German tax authorities can fine businesses for issuing improper VAT invoices. If an invoice shows VAT incorrectly (like charging VAT when it shouldn’t, or showing higher amount), or not meeting requirements:
  • A penalty up to €5,000 per invoice can be imposed, especially if used to fraudulently claim credits. The note in vatcalc says “Penalties of up to €5,000 per incorrect VAT invoice”. [vatcalc.com]
  • Also, if someone charges VAT without being registered or for a non-taxable supply and fails to remit it, they are still liable to pay that VAT to the tax office (and fix the invoice).
• Fraud Penalties: In cases of tax fraud or evasion:
  • Criminal charges can apply for serious evasion. Germany prosecutes VAT fraud (like carousel fraud) as a crime, with potential prison sentences.
  • If taxpayers voluntarily disclose errors before being caught (self-disclosure of evasion), penalties can be reduced. Vatcalc notes “Fines for fraud range from 10% to 20% of amounts involved where voluntary disclosure”, implying that if one comes forward, they might pay a fine of 10-20% instead of criminal charges, depending on timing and completeness. [vatcalc.com]
  • If caught, penalties can be much higher plus interest, and criminal fines or imprisonment for those responsible.
• Other Administrative Fines:
  • Not keeping proper books or records can result in fines.
  • Failure to comply with the cash register TSE rules (section 20) can see fines up to €25,000 under those specific laws.
  • Non-compliance with ESL/Intrastat also have fines as noted (ESL late up to €5k; Intrastat theoretically up to €10k or so, but rarely enforced).
• Business Consequences: Late VAT payments can also result in a company being flagged, potentially requiring to provide guarantees or more frequent audits. In extreme cases, persistent non-payment could lead to enforcement like account seizure.
• Abatement: German tax offices often have discretion. First-time or minor delays might be forgiven or low penalty. With cause (illness, technical issues), penalties can be waived. It’s advisable to communicate with the tax office if there’s an issue to possibly avoid a penalty.
• Compliance Focus: Because 1% per month surcharge is effectively 12% annual, which is steep (though partially offset by input VAT savings etc.), businesses heavily avoid late payments. Similarly, failing to file can automatically generate penalties now due to improved systems.

25. Other Notable VAT Features

• Small Business Scheme (Kleinunternehmerregelung): As mentioned, businesses with low turnover (≤ €22,000 in previous year, ≤ €50,000 current) can opt out of VAT. They then do not charge VAT on sales and cannot recover VAT on purchases. This is a major simplification for micro-businesses. They must include a statement on invoices like “VAT not shown due to small business status acc. to §19 UStG.” This is commonly used by freelancers and very small traders in Germany.
• Option to Tax Real Estate: Rentals and sales of commercial real estate are VAT-exempt by default, but Germany allows an option to VAT such transactions if the tenant/buyer is a business. The landlord/seller can waive the VAT exemption (§9 UStG) so that VAT is charged (19%) and then input VAT on related costs can be recovered. This option is only effective if the recipient is a business that uses the property at least 95% for taxable activities (to avoid abuse for mostly exempt usage).
• Change of VAT Rates (Temporary): Germany in 2020 implemented a temporary VAT rate cut (standard from 19% to 16%, reduced 7% to 5%) for 6 months to stimulate the economy during COVID. Businesses had to adapt pricing and invoices quickly. While that ended in Dec 2020, it shows Germany’s willingness to adjust VAT rates temporarily in crises. [vatcalc.com]
• Margin Schemes: Germany applies EU margin schemes for second-hand goods, art, antiques, and collector’s items (Differenzbesteuerung). Under these, dealers can choose to pay VAT only on the profit margin instead of full value, and they cannot show VAT on the invoice to buyers. Also, the tour operators’ margin scheme (TOMS) is implemented: travel services sold as packages are taxed on the margin and considered consumed at the travel destination (with some special rules).
• Agricultural Flat Rate Scheme: Germany has a flat-rate farmer scheme under §24 UStG. Farmers who opt for it (or by default if small) charge a flat-rate VAT (currently 9% for outputs like farm produce) instead of normal VAT and cannot claim input VAT; this flat rate is meant to compensate for input VAT. Many small farmers use this instead of full VAT accounting.
• Bad Debt Provision: We covered this in compliance, but note Germany doesn’t have a formal defined period as some countries do. It’s notable because it requires a case-by-case demonstration of irrecoverability.
• Joint Liability for VAT: If a business fails to pay VAT, sometimes others can be held liable. For instance, if a business buys goods where VAT fraud occurred upstream, the tax authority can hold the buyer liable if they knew or should have known (fraud carousel context). Also, managing directors can be personally liable for unpaid VAT of a company if they didn’t fulfill tax duties.
• VAT on Vouchers: Germany adopted the EU rules (2019) distinguishing single-purpose vs multi-purpose vouchers. SPVs (where place and rate of supply known) have VAT on sale; MPVs VAT on redemption.
• E-commerce Marketplace Liability: From 2019, Germany made online marketplaces (Amazon, eBay) liable for VAT on sales by merchants on their platform if those merchants fail to register. Marketplaces must keep records of VAT IDs and could be held accountable for unpaid VAT by sellers (especially non-EU) unless they obtained certain certificates (Bescheinigung according to §22f UStG) from sellers. This prompted marketplaces to enforce that sellers have German VAT numbers.
• Insurance and financial services input VAT refund: Although these outputs are exempt, Germany allows companies in these sectors to get relief via a special input VAT refund if the services are used outside the EU (as per Directive refund schemes and such). Not unique, but a notable nuance.
• Car Leasing Cross-Border: There’s a specific simplification for cross-border car leases within EU for private individuals (taxed where customer is if >30 days etc.), but that may be too granular.
• Chain Transactions and 2020 Quick Fixes: Germany updated its rules for chain transactions (where multiple parties but one transport) as per EU “quick fixes” in 2020. The transport is ascribed to one leg of the chain; usually if an intermediary arranges transport, they are the exempt intra-EU supplier. Also implemented was required VAT ID of customer for zero-rating intra-EU supply (VAT ID must be valid and in VIES, else zero-rate can be denied).
• Export Evidence: Germany is strict on documentation for zero-rated exports. If documents can’t be shown on audit (customs stamped docs, etc.), the 0% can be disallowed, and 19% assessed.
• Digital Reporting Developments: Looking ahead, Germany is actively preparing for a more digital VAT regime (part of “Digitalpaket”). It has the green light to mandate B2B e-invoicing nationally (expected fully by 2028 as per section 14). Also, it’s participating in EU discussions on “reporting transactional data” (perhaps implementing continuous transaction controls in future). These are not active yet but notable in the near future. [vatcalc.com], [vatcalc.com]
• Energy Sector VAT: Some unique rules e.g., VAT on solar panels: as of 2023, Germany introduced a 0% VAT rate on supply and installation of small photovoltaic (solar panel) systems for private houses, to encourage renewable energy adoption. This is a new measure leveraging an option in EU law to zero-rate certain goods (to combat climate change). This would be a notable feature post-2023 – first time Germany uses a targeted 0% rate domestically outside typical intra-community/export contexts.
• Investment Gold: Germany exempts investment-grade gold (coins/bullion) in line with EU rules, but allows opting to tax it if desired by the supplier.
• Special Audits: VAT “special audits” are common and separate from general audits, focusing just on VAT compliance. Officials may do these more frequently if a refund is large.