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German VAT Guide for Businesses

Value Added Tax (VAT) or Mehrwertsteuer (MwSt.) in German, was introduced in the Federal Republic of Germany on 1 January 1968.

As Germany is a member of the European Union, its VAT legislation is currently based on EU directives.

What is the Standard VAT (MwSt.) Rate
in Germany?19%

Number of returns per year: 13/ 5

The standard VAT rate in Germany is currently 19%. There is also a reduced VAT rate of 7%. Due to Covid-19, the standard-rated VAT was reduced to and the reduced VAT 16% rate to 5% between 1 July 2020 – 31 December 2020.

Requirement to Register for VAT

Generally, there is no threshold for VAT registration. Registration is required if the company intends to carry out transactions which are subject to German VAT. In the case of distance selling, the current registration threshold is €100,000 (§ 3c (3) German VAT Act).

Registration can be arranged based on a power of attorney. The official standpoint is that correspondence from the tax authority to outside Germany can only be delivered to the seat of the company.

Generally, the following documents are to be submitted:

  • Articles of association, certificate of incorporation,
  • Power of attorney (PoA) in case of companies established outside of Germany,
  • Certificate of registration
  • Signature specimen and
  • The excerpt from the commercial register.

Description of business activity may also be required depending on the competent tax authority.

VAT Filing Frequency
and Deadlines

Like all EU member states, the German VAT reporting calendar is on an annual basis. Therefore an annual VAT return must always be filed for each calendar year. The company has to report its VAT position by filing preliminary VAT returns on a monthly basis where VAT due in previous calendar year exceeds the amount of €7,500.

Preliminary VAT return has to be filed quarterly if VAT due in previous calendar year is lower than €7,500. If the net VAT due in the previous calendar year did not exceed €1,000, no preliminary VAT returns have to be filed but only the annual VAT return. The exception is newly registered companies, which must submit each month for two years.

Agents and Fiscal Representatives

For non-EU businesses in accordance with the German law (§ 22/A –22/E German VAT Act) it is not obligatory to announce fiscal representative. For EU businesses the appointment of fiscal representative is also optional.

Fiscal representation is possible for companies located abroad which conduct business in Germany exclusively free of VAT, and for which no input tax amounts can be deducted.

Declaration

The VAT declarations are to be submitted by the 10th day of the month following the relevant period:

  • The VAT declarations are to be submitted by the 10th day of the month following the relevant period:

    • If quarterly filing is in place, the declarations are due by 10th April, 10th July, 10th October and 10th January.
    • If monthly filing is applicable, declarations are due by 10th February, 10th March, 10th April, 10th May, 10th June, 10th July, 10th August, 10th September, 10th October, 10th November, 10th December and 10th January

    If the 10th of a month is a Saturday, a Sunday or a national holiday, the deadline is extended until the end of the next working day.

    The first VAT return period is determined in the letter of registration by the local tax office.

Submission

In Germany, the submission of VAT returns has been done electronically since 2013 (Elster, Datev ect.), with electronic authentication, over the internet. Tax has to be settled before the submission deadline of the VAT return.

Companies are allocated to one of the German tax offices based on the country of residency of the trader.

Invoicing Requirements

Whenever the business supplies standard-rated or reduced-rated goods or services it must issue a VAT invoice. However, there is no need to issue a VAT invoice if the customer is not VAT registered, for zero-rated supplies, if the customer operates self-billing arrangements or for gift of goods on which VAT is due.

An invoice must contain the following information:

  • The full name and address of the supplier and the recipient of the service,
  • The tax number issued to the supplier by the tax office or the VAT identification number issued to him by the Federal Central Tax Office,
  • The date of issue
  • A consecutive number with one or more series of numbers, which is assigned once by the issuer of the invoice to identify the invoice (invoice number),
  • The quantity and type (customary commercial description) of the goods supplied or the scope and type of other service,
  • The date of the supply or other service; in the cases of paragraph 5, first sentence, the date of receipt of the consideration or part of the consideration, provided that the date of receipt is issue of the invoice,
  • The consideration for the supply or other service (section 10), broken down according to tax rates and individual tax exemptions, as well as any reduction of the consideration agreed in a consideration,
  • The applicable tax rate as well as the amount of tax due on the consideration or, in the case of a tax exemption, an indication that a tax exemption applies to the supply or other service,
  • In the cases of section 14b (1) sentence 5, a reference to the duty of the recipient of the supply to keep records; and
  • In cases where the invoice is issued by the recipient of the supply or by a third party appointed by him in accordance with paragraph 2, sentence 2, the indication “credit note”.

Please refer to §14 and §14a UStG for special requirements. In case of reverse charge, intra-community transactions etc, the invoice should contain a respective notice.

Further Requirements
The following additional requirements are also to be taken into consideration along with the above mentioned invoicing requirements:

  • Invoicing deadline
  • Reference on the invoice

It is allowed to issue an invoice in foreign currency under the German VAT law.

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