Germany’s phased rollout of business identification numbers is projected to be complete by 2026. The new identification numbers are intended to simplify and accelerate current processes.

This article provides a detailed overview of what the new business identification numbers are, why they are being introduced, and who they will impact. We’ll also look at how business identification numbers will be assigned and their legal consequences for businesses in Germany.

What’s in this article?

• What is a business identification number?
  
• Why are business identification numbers being introduced?
  
• Who will receive a business identification number?
  
• Sample business identification numbers
  
• How are business identification numbers obtained?
  
• How are business identification numbers allocated?
  
• What are the legal implications of business identification numbers for businesses in Germany?
  

What is a business identification number?

A business identification (ID) number, also known as a Wirtschafts-ID or W-IdNr. in German, is a unique identifier for taxpayers in Germany involved in business activities. According to Sections 139a and 139c of the German Fiscal Code (AO), business ID numbers essentially serve a similar purpose as tax identification numbers (Tax IDs): providing unique identification.

While a tax ID is mainly used by the tax office for tax-related matters, a business identification number is used for the general identification of businesses in both national and international business transactions. In the future, the business identification number will replace the tax ID in certain areas. However, tax ID numbers remain valid for the time being.

A business identification number is also distinct from a value-added tax (VAT) ID number (USt-ID). A VAT ID number is specifically used for intracommunity trade within the European Union (EU). A VAT ID is therefore important for businesses that provide products and services across international borders, within the EU. Small businesses and entrepreneurs who only conduct domestic transactions do not need VAT ID numbers. However, business identification numbers are required for all businesses in Germany.

Why are business identification numbers being introduced?

Business identification numbers are being introduced to modernize and streamline tax administration for businesses in Germany. According to the Federal Central Tax Office, the business ID number is “a key foundation for digitalization.” It aims to simplify communication between authorities and businesses across Germany.

A business identification number remains valid for as long as the business continues to operate. It remains unchanged even if key information, such as the business owner’s name, marital status, residential address, or place of management, is updated. Thus, it acts quite like a tax identification number—what the tax identification number is to individual taxpayers, the business identification number is to businesses and business owners.

In the long run, business identification numbers should simplify tax and administrative processes in Germany. For this reason, they will be gradually incorporated into forms and applications from the tax authorities. Eventually, business ID numbers will be the main form of identification for official communication. Ideally, businesses will no longer need to submit their data to various authorities in the future, and will instead provide their business identification numbers. This would greatly reduce the administrative workload for both businesses and the tax authorities. Tax transparency would likely improve as well, providing authorities with better traceability and control.

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Who will receive a business identification number?

A business identification number will be issued to all individuals and entities engaged in business activities in Germany. This includes, among others:

• Freelancers and self-employed individuals: Freelancers require a business identification number. The same applies to self-employed individuals engaged in commercial activities.
  
• Entrepreneurs: Corporations like limited liability companies (GmbHs) or stock corporations, partnerships such as GmbH & Co. KGs, and sole proprietorships involved in taxable commercial activities will be assigned a business identification number.
  
• Private sector employees: Salaried employees who also engage in commercial activities, such as side businesses or freelancing, need business identification numbers.
  
• Farmers: Anyone earning taxable income from agricultural activities must have a business identification number.
  
• Associations and foundations: Noncommercial but economically active organizations, such as associations, will also receive business ID numbers if they generate taxable income.
  

Not all individuals and entities that generate income or engage in economic activities will automatically receive a business identification number. These are some exceptions:

• Individuals earning income from renting and leasing: Individuals who only earn income from renting and leasing are not considered economically active for the purposes of business identification numbers. Regular rental income is classified as private income, not income from a business activity.
  
• Private asset management: Individuals who manage assets privately, without any commercial or freelance intent, will not receive business identification numbers. This applies, for example, to investors who do not engage in any active economic activity.
  
• Nontaxable organizations: Nonprofit or tax-exempt organizations that do not conduct commercial activities are also not required to have business identification numbers. They are not subject to the tax regulations that apply to commercial entities.
  

Sample business identification numbers

The Federal Central Tax Office (BZSt) uses a simple format to issue business identification numbers. Like a sales tax identification number, it consists of the prefix “DE” followed by a unique nine-digit number.

Example: DE123456789

Unlike a sales tax identification number, a business identification number includes an additional five-digit distinguishing identifier. Each economic activity, business, and permanent establishment is assigned a consecutive number, starting with “00001.”

• Example for the first activity: DE123456789-00001
  
• Example for the second activity: DE123456789-00002
  
• Example for the third activity: DE123456789-00003
  

It’s important to note that business identification numbers do not include any personal or operational information. This means, among other things, that they do not include details such as the responsible tax offices or the nature of the economic activities. All distinguishing identifiers are associated with tax numbers, which register businesses or permanent establishments with the tax office.

How are business identification numbers obtained?

Business identification numbers are automatically issued by the Federal Central Tax Office, so there’s no need to apply. This also applies to startups: numbers are automatically assigned as part of the tax registration process.

However, since the introduction of business identification numbers involves significant technical and administrative challenges for the Federal Central Tax Office, the numbers will be assigned gradually. All individuals and entities that need business identification numbers will be notified in advance. Anyone legally required to provide a business identification number in notifications or reports must do so only after receiving the number.

How are business identification numbers allocated?

The Federal Central Tax Office has been issuing business identification numbers in phases since November 1, 2024.

In the first phase, commercial entities will receive a number with a distinguishing identifier if they are required to file an annual VAT return or operate as a small business under Section 19 of the German VAT Act (UStG).

Commercial entities that do not meet these requirements are expected to receive their business identification number in phase two, beginning in the third quarter of 2025.

In phase three, the Federal Central Tax Office will issue additional distinguishing identifiers for those engaged in multiple economic activities, starting from the second quarter of 2026 at the earliest.

What are the legal implications of business identification numbers for businesses in Germany?

Businesses in Germany are legally required to use business identification numbers if they participate in tax-related procedures. For example, a business must provide the number when filing its tax return or communicating with the tax authority. If the business identification number is missing or used incorrectly, it can result in administrative delays or issues when processing tax returns.

Businesses that run a website must also ensure they comply with the regulations on legal notices. This regulation arises from Section 5, paragraph 1, no. 6 of the German Digital Services Act (DDG); it states that if a business in Germany has a VAT identification number, it must include this or the business identification number in the legal notice. It is not legally required to provide both numbers. However, if the business opts not to include a VAT ID, it must provide a business identification number in the legal notice.