German VAT rates and VAT compliance
German VAT rates
Whilst Germany follows the EU rules on VAT compliance, it is still free to set its own standard (upper) VAT rate. The only proviso is that it is above 15%. Suppliers of goods or services VAT registered in German must charge the appropriate VAT rate, and collect the tax for onward payment to the German tax authorities through a VAT filling see German VAT returns briefing.
The current rates are:
German Covid-19 VAT rate cuts
Germany has temporarily cut VAT to help support businesses and consumers during the Coronavirus pandemic crisis.
|Supply||Old rate||New rate||Implementation date||End date|
|Standard rate||19%||16%||01 Jul 2020||31 Dec 2020|
|Reduced rate||7%||5%||01 Jul 2020||31 Dec 2020|
|Hospitality, restaurants, cafes||7%||5%||01 Jul 2020||1 Jul 2021|
|Rate||Type||Which goods or services|
|19%||Standard||All other taxable goods and services|
|7%||Reduced||Some foodstuffs; water supplies (excluding bottled water); medical equipment for disabled persons; some domestic passenger transport; intra-community and international passenger transport for certain road, rail and inland waterway transportation; books (excluding books whose content is harmful to minors); e-books; audiobooks; newspapers and periodicals (except those containing content harmful to minors and/or more than 50% advertising); admission to cultural events; writers and composers; some agricultural inputs; hotel accommodation (only short-term accommodation); certain admission to sports events; social services; medical and dental care; firewood; some timber for industrial use; take away food; cut flowers and plants for decorative use and food production; taxation of some gold coins and jewellery|
|0%||Zero||Intra-community and international transport (excluding road and rail and some inland waterways transport)|
German VAT compliance
Once registered for German VAT, you will have to start following the local rules in a number of aspects. This includes:
- Issuing invoices with the disclosure details outlined in the German VAT Act.
- Electronic invoices with proper signature, authenticity and agreement by the recipient.
- Maintenance of accounts of record, which must be held for at least 10 years.
- Correct invoicing of customers for goods or services in accordance with the German time of supply VAT rules.
- Processing of credit notes and other corrections.
- Use of approved foreign currency rates.
What is the tax point for German VAT?
The tax point, or time of supply rules in Germany determine when the VAT is due. It is then payable to the tax authorities 10 days after the VAT reporting period end (monthly or quarterly).
For most goods, it is the time of delivery or passage of title. For services, it is the completion of the service.
Need help with your German VAT compliance?
Researching German VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.
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