VAT guide Germany
Welcome to our comprehensive guide on VAT (Value Added Tax) in Germany, tailored for e-commerce sellers in Europe looking to expand their business to the German market. Understanding the VAT system in Germany is crucial for conducting business smoothly, and in compliance with both local and EU VAT regulations. Below, you’ll find vital information on VAT rates for different categories, registration procedures, filing requirements, and other relevant details.
VAT rates in Germany
As a EU member state Germany adheres to the VAT rules of the European Union, but maintains the autonomy to set its own standard VAT rate, which must be above the EU’s minimum of 15%. When you are a VAT-registered seller in Germany, you are required to apply the correct VAT rate to your goods or services and remit this collected tax to the German tax authorities.
There is a standard rate of 19%, a reduced rate of 7%, and a zero-rate.
The primary German VAT rates are as follows:
Rate | Type | Goods/Services |
19% | Standard rate | This rate applies to most taxable goods and services not listed under reduced or zero rates. |
7% | Reduced VAT rate | Applicable to specific items including certain foodstuffs; water supplies; medical devices for disabled persons; specific domestic passenger transport; intra-community and international passenger transport for certain road, rail, and inland waterway transportation; books, e-books, and audiobooks (excluding harmful content to minors); newspapers and periodicals (with exceptions); admission to cultural events, sports events; social services; medical and dental care; temporary accommodation, and several agricultural and industrial products. |
0% | Zero rate | Primarily for intra-community and international transport services, excluding road and rail and certain inland waterways. Zero-rated items allow for reclaiming input VAT. |
German VAT Compliance: Filings & Registrations
German VAT Number
If you are an e-commerce vendor eager to enter the German market, obtaining a German VAT registration is often your initial step. This registration is mandatory for carrying out taxable transactions in Germany.
How to register for VAT
To register for VAT in Germany, e-commerce sellers can either directly contact the German tax authorities or use the services of a tax consultant specialized in international VAT. The process typically involves the following steps:
Form Submission: Complete the necessary VAT registration forms provided by the German Federal Central Tax Office (Bundeszentralamt für Steuern or BZSt). Non-EU businesses may need to appoint a fiscal representative.
Documentation: Supply supporting documents, which may include business registration documents, proof of identity for business owners, and a description of the business activities.
Application Review: After submission, the tax office will review the application. This process could take several weeks.
VAT Number: Once approved, you will receive a German VAT number (Umsatzsteuer-Identifikationsnummer or USt-ID-Nr.).
Where to register for VAT in Germany
The registration for VAT in Germany can be initiated through the website of the German Federal Central Tax Office.
German VAT Returns
In Germany, VAT filings can be a complex process. You may need to submit monthly or yearly VAT returns depending on your business size and type. It’s important to be aware of the specific deadlines, exceptions, and potential fines for non-compliance or late filings. Please note: it is always mandatory to file a yearly VAT return.
In Germany, VAT is due on the 10th of the month regardless whether you submit your filings monthly or quarterly. This means your German VAT must be filed before or on the 10th of that month.
How to submit VAT filings
VAT filing in Germany must be completed periodically, typically monthly or quarterly, and submitted electronically. Here’s how:
Electronic Filing: VAT returns should be filed through the ELSTER portal (Elektronische Steuererklärung) – the online tax filing system managed by the German tax authorities.
Submission and Payment: Ensure timely submission of VAT filings and corresponding payments, as late submissions can incur penalties. Payments are typically made via bank transfer to the designated bank account of the German tax office.
Annual VAT Return: Besides the periodic filings, an annual VAT return might also be required, summarizing the VAT for the entire year.
Where to submit German VAT Returns
VAT filings are submitted via the ELSTER portal, found at https://www.elster.de/. This platform is specifically designed for tax filing purposes in Germany and is used for submitting various types of tax returns, including VAT.
Remember, while the ELSTER portal is user-friendly, navigating German tax law and the filing process can be complex, particularly for non-German speakers. It’s crucial to ensure that all information is accurate and that filings are completed on time. Many e-commerce businesses opt for the expertise of a tax advisor or a VAT compliance service provider to manage their VAT obligations in Germany.
VAT Fines in Germany
VAT-related fines in Germany can be severe and arise from late filings, incorrect filings, or failure to register. Compliance is critical to avoid these financial penalties.
In Germany, the specifics of VAT-related fines can vary depending on the nature of the violation. The German tax authorities can impose fines for non-compliance with VAT registration, filing, and payment requirements. While the specific maximum fine amounts can be subject to change and depend on individual cases, the following general principles typically apply:
Infraction Type | Penalty Description | Fine Amount / Penalty |
Late Filing | Failure to file VAT return on time | Up to 10% of the tax due, max €25,000 |
Late Payment | Delayed payment of VAT due | 1% of the tax due for each month overdue |
Negligence | Incorrect VAT filing due to negligence | Up to 10% of the understated tax, max €50,000 |
Tax Evasion | Intentional underreporting or non-payment | Fines based on the offense, up to the total amount of evaded tax; can also lead to prison sentences of up to 5 years |
Record Keeping Violations | Inadequate maintenance of records for ten years | Fines are case-specific |
Note: These values are indicative based on previous regulations and may have changed; it’s essential to consult current resources or a tax professional for the latest information.
Threshold for VAT registration
Different VAT thresholds are applicable in Germany:
For domestic sellers, registration for VAT is mandatory once sales exceed €22,000 in a calendar year.
E-commerce sellers from other EU countries must register for VAT in Germany if their sales exceed €100,000 in the calendar year.
Please note that these figures are subject to change and it is advisable to consult with a tax advisor or the German Federal Central Tax Office for current thresholds and tax regulations.
