German VAT rates

VAT in Germany (MwSt/USt). What is the VAT rate in Germany? What is the restaurant VAT in Germany? How high are the sales tax rates in Germany? What is the VAT rate for food you eat at restaurants? What is the German VAT on candy? How many reduced VAT rates does Germany have? How high is the VAT rate on ice cream in Germany? Which VAT rate does food have? What is the VAT on fruits and vegetables? Where can I find the distance selling threshold value for German sales?

VAT news for Germany

The temporary reduction in VAT for pubs, restaurants and cafés will expire on 1 January 2024.

The regular rate is reduced from 19% to 16%. The reduced rate drops from 7% to 5%. Food catering is reclassified from 19% to 5%. Take-away is already at a reduced rate of 7% and will now get 5%. The reclassification of catering food will be a full year ranging from 1 July 2020 to 1 July 2021. This will probably lead to some confusion regarding what has a reduced rate and when the reduction will end.

All digital marketplaces are now (2019) responsible for making sure VAT is collected.

Germany changes the interpretation of the rule for supplying products from a German warehouse. The shift in legal definition implies it will now be possible to account and declare a sale of goods from a German warehouse to a German company as a “VAT-free sale within the EU”; if you sell from a company based outside Germany but have a warehouse inside Germany. Consequently, some non-German companies don’t have to be VAT registered in Germany anymore. Before 2017, older rules and their interpretations stated that stock deliveries from German warehouses always required a German VAT registration. This is no longer the case.

VAT rates in Germany

The German market is the world’s fourth-largest economy. Therefore it’s natural that many European small business owners are interested in the German market. Because of this, there is also a need for information about the German VAT rates in English. Which are the VAT tax rates in Germany? What is the standard VAT rate in Germany? What is the VAT on electronic services in Germany?

German VAT rates. Germany has two VAT rates. The standard level being 19% and the reduced sales tax rate on 7%.

Vat rates in Germany

German VAT number format

Format for EU-VAT number in Germany: DE000000000

What is the standard VAT rate in Germany?

Standard VAT rate in Germany: 19%

What is the reduced VAT rate in Germany?

Reduced VAT rate in Germany: 7%

Basic foodstuffs e.g., Butter, Milk (Alcoholic content, Soft drinks, Soya Milk and Juice = 19%), Coffee, Tea (Beer has 19% VAT which stays in the local state), Meat, Sausage, Seafood (except Lobster, Oyster, Snails, Caviar = 19% but many luxury items have 7% and this part of the German VAT-system is particularly confusing and illogical), Water delivery (Bottled or tap drinking water has 19%, only delivery of water which has 7%), Spices, Salt, Sugar, Cocoa, Honey, Pastry, Cakes, Candy, Popcorn, Ice Cream, Chips, Plants, Potatoes, Flour, Butter, Cheese and in Germany Truffle is considered a necessary food for survival(!). Animals, Animal and vegetable fats. Animal feed and fertilizers.

Books and Magazines (not containing content that is “harmful to children” or over 50% advertising), Entrance fees, Artworks sold by the artist himself.

Takeaway food – Germany has a complicated system where the level of service and infrastructure influences if the VAT is reduced; simplified, serving in the restaurant environment has 19% while the takeaway food that you take away from serving is 7%. Examples that get 7% even if there is infrastructure in the form of chairs, toilets, and cutlery: food courts, school catering, catering in hospitals, and food stalls/trucks.

Private medical and dental care, some medical auxiliary equipment such as Wheelchair, Pacemaker and Hearing Aid (but Eyeglasses 19% ..), Collector’s items including some gold coins and jewels, Passenger transport up to 50 km and Hotels (but services related to hotel operations are not included in the lower VAT rate, this means that Breakfast, Parking, Minibar, Spa etc have 19%). However, you often see an extra “Kurtaxe” (local tourist tax) between € 3-5 for hotel stays. Transfer of Copyright also has a reduced rate.

A detailed list of reduced items in the German VAT system

VAT at Restaurants in Germany

The VAT rate for dining inside a restaurant is 19% but 7% for takeaway items.

Food served in the restaurant is taxed at 19% VAT. It does not matter if the quality is standard or high. The preparation of food does not impact VAT after 2013.

Examples that get 7% even if there are infrastructure elements that should have rendered the VAT rate 19%: Food courts, school dining, catering at hospitals and food stalls/wagons.

Anything that has 7% VAT will get 19% if served in a restaurant setting.

VAT for catering services

Catering is invoiced with 19% if the service level is high and forks and knives etc. are included as a service package. This is because the service part is considered the main supply rather than just a supply of physical goods. Pure deliveries of food are considered take-away, or supply of goods, and are subject to 7% VAT. Catering is a problematic grey zone in the German tax system. Deliveries by party och catering services can, therefore, be invoiced with both rates but in many cases, they have the right to invoice with 7% VAT.

This guide helps clarify when the catering service gets 19% VAT

Which VAT is applied on cookies, cakes, ice cream, and sweets?

This category often falls in the basic foodstuffs, like regular bread and bakery products. Sugar, cocoa, salt, and other spices have a reduced rate of 7%. Candy and popcorn have 7% VAT. Alcoholic products have 19%. Ice cream, gummy bears (gelatine), and potato chips have 7% because they are considered a basic foodstuff. Dog biscuits 7%, but children’s biscuits 19%. More voices are steadily calling out for candy and sweets to be raised to the 19% VAT level to help fight the obesity epidemic among the young, hence this may change in the future.

See the VAT rates for all EU member countries

German VAT rate for electronic services

If you have you have sold apps, games, pictures, music (e-services), then you should use the German VAT rate of 19% when calculating the VAT for the customer. As you may know, companies must now calculate and collect VAT for the customer when selling digital services to private individuals – based on the VAT rate in the customer’s country (MOSS VAT system).

Threshold for distance sales to Germany

What is the value limit for distance sales to Germany? If you have traded with Germany with sales exceeding €100000, then you must register for VAT in Germany and pay and report VAT in Germany to the German Tax Authorities.

Threshold limit for registration of distance sales: €100000

How do you register for VAT in Germany?

One peculiar thing with VAT registration for foreign companies in Germany is that you are allocated to a particular local Tax Office depending on the country of origin of your business. No central office manages VAT registrations for foreign corporations. As an example, UK companies are handled by the tax office in Hanover. American (USA) companies are allocated to Bonn.

See a complete list of contact details for German Tax Authorities and individual offices for foreign companies based on country of origin

Exceptions for VAT in Germany

There are two exceptions for VAT in Germany that few people are aware of. If you sell to the German region of Heligoland, an island southwest of Denmark that switched nationality many times, you need to stop and think about how you manage VAT and invoicing. It is now formally part of Schleswig-Holstein and Germany but not included in the EU VAT area. The other exception is the area Büsingen am Hochrhein, which is located in Switzerland just south of the German border. Formally, the area is part of Germany, but economically a part of Switzerland, which means it is treated as if it were outside the EU VAT area concerning taxes.

If you sell to one of these two German areas it counts as an export outside the European Union (comparable with the Finnish Åland Island). If you buy from a company situated inside these areas, it becomes import to the EU from a country outside the EU, from a VAT perspective.