How to Calculate Germany VAT (MwSt)

Germany's Value Added Tax (VAT), known locally as "Mehrwertsteuer" (MwSt), is a consumption tax applied to goods and services. Germany has a standard VAT rate of 19%, along with a reduced rate of 7% and a zero rate for certain supplies. VAT is administered by the Bundeszentralamt für Steuern (Federal Tax Office). Germany is an EU founding member and its VAT system is harmonized with EU rules.

Adding VAT to a Price

When you need to add VAT (MwSt) to a VAT-exclusive price, use these formulas:

Example for 19% standard rate: If the base price is €100 (excluding VAT):

VAT Amount = €100 × 0.19 = €19.00

Total Price = €100 + €19.00 = €119.00

Example for 7% reduced rate: If the base price is €100 (excluding VAT):

VAT Amount = €100 × 0.07 = €7.00

Total Price = €100 + €7.00 = €107.00

Removing VAT from a Price

When you need to calculate the VAT-exclusive price from a VAT-inclusive price, use these formulas:

Example for 19% standard rate: If the total price is €119 (including VAT):

Base Price = €119 ÷ 1.19 = €100.00

VAT Amount = €119 - €100 = €19.00

Understanding Germany's VAT System

What is MwSt (VAT) in Germany?

Mehrwertsteuer (MwSt) is Germany's value-added tax. It's a consumption tax collected at each stage of the supply chain with the final burden on consumers. Germany's VAT system is harmonized with EU VAT rules as a founding member. Businesses can claim input tax credits for VAT paid on business purchases, preventing tax accumulation.

The Three German VAT Rates

Standard Rate (19%): Applies to most goods and services including electronics, clothing, motor vehicles, alcohol, tobacco, professional services, and most other items not covered by reduced or zero rates.

Reduced Rate (7%): Applies to essential goods and services including:

• Basic foodstuffs (bread, milk, meat, fish, vegetables, fruits)
• Printed books and e-books
• Newspapers, magazines, and periodicals
• Pharmaceutical products and medicines
• Medical aids and equipment for disabled persons
• Hotel accommodation and short-term lodging
• Restaurant and catering services (including takeaway food)
• Passenger transport services (buses, trains, domestic flights)
• Admission to cultural events (theatre, cinema, museums, concerts)
• Sports event admission
• Water supplies (excluding bottled water)
• Cut flowers and plants for decoration
• Copyright and artistic licensing
• Firewood and timber for industrial use

Zero Rate (0%): Applies to specific supplies:

• Intra-community supplies to other EU member states
• Export of goods from Germany
• International passenger transport by air and sea
• Cross-border transport of goods
• Processing of goods under temporary admission
• Catering on international voyages
• Supply to foreign military forces
• Sale of gold to central banks

VAT Registration Requirements

Businesses in Germany must register for VAT if:

• Annual turnover exceeds €25,000 - Registration threshold for domestic businesses
• €100,000 for EU digital services sellers - Lower threshold for cross-border EU sellers
• Non-residents making supplies in Germany - Must register and appoint tax representative
• Importers - Any importer must register

Businesses below the threshold can voluntarily register for VAT to claim input tax credits.

VAT Filing and Compliance

VAT-registered businesses in Germany must file VAT returns with the Bundeszentralamt für Steuern (Federal Tax Office):

• Monthly VAT Return: Most businesses file monthly
• Quarterly VAT Return: Available for eligible businesses
• Annual VAT Return: Year-end reconciliation (Jahreserklärung)
• Payment Deadline: Payments due 10 days after deadline with no payment extension
• Electronic Filing: All returns and invoices submitted electronically via ELSTER
• Penalties: Late filings or payments incur fines (5-10% of unpaid VAT)

VAT-Exempt and Special Supplies

Exempt Supplies (No VAT, No Input Credit)

Some supplies are exempt from VAT, meaning businesses cannot claim input tax credits:

• Healthcare Services: Medical and dental services by healthcare professionals
• Education: Educational services by approved educational institutions
• Financial Services: Banking, insurance, investment services (mostly)
• Postal Services: Universal postal services by Deutsche Post
• Property Transactions: Sale and lease of real property (mostly)
• Social Services: Social welfare and care services
• Betting and Gambling: Lottery and gaming services
• Broadcasting: Public broadcasting services (some)
• Cultural Services: Certain cultural and entertainment services

Items Subject to 19% Standard Rate

The following are subject to standard 19% VAT:

• Electronics and appliances
• Clothing and footwear (except children's in some cases)
• Motor vehicles and parts
• Alcohol and tobacco
• Professional services (consulting, IT, legal)
• Most entertainment services
• Haircuts and beauty treatments
• Furniture and household goods
• Gasoline and fuel (except marked agricultural diesel)

Items Subject to 7% Reduced Rate

The following are subject to 7% VAT:

• Basic foodstuffs and groceries
• Books and e-books
• Newspapers and magazines
• Medicines and pharmaceuticals
• Medical equipment and aids
• Hotel and accommodation services
• Restaurants and catering services
• Passenger transport
• Cultural event admission
• Water supplies

Germany VAT Quick Reference

Frequently Asked Questions (FAQ)