Germany Plans VAT Reform with 21% Standard Rate and Zero-Rated Food

• Germany’s coalition parties have agreed on a major VAT overhaul, the “21–10–0 model,” planned to take effect on 1 January 2027.
• The standard VAT rate would rise from 19% to 21%, and the reduced rate from 7% to 10%.
• Food products would generally be subject to a 0% VAT rate to offset the impact on consumers.
• The reform is expected to raise about €16 billion net annually, helping fund planned income tax cuts.
• A 0% VAT rate is not the same as an exemption: businesses could still deduct input VAT, though the exact scope of “food products” is not yet clear.

Source: meridianglobalservices.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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