Germany’s value-added tax (VAT) system touches almost every sale made in the country, from local transactions to cross-border ecommerce and digital services. Understanding VAT in Germany, including its different rates, registration rules, compliance requirements, and refund process, is an important aspect of doing business in the German market.

Below, we’ll explain how the Germany VAT rate works, who needs to register, and what’s involved in VAT compliance.

What’s in this article?

• What is the Germany VAT rate?
  
• What is a German VAT number?
  
• How do VAT rates differ in Germany?
  
• Who needs to register for VAT in Germany?
  
• How does VAT compliance work in Germany?
  
• How do VAT refunds work in Germany?
  
• How Stripe Tax can help
  

What is the Germany VAT rate?

Value-added tax (VAT) is an excise on goods and services applied indirectly by sellers, who include it in the final price. In Germany, this tax is known as Mehrwertsteuer or MwSt. The standard German VAT rate is 19%, and it is applied to the majority of sales in the country.

What is a German VAT number?

A German VAT number is the identifier that confirms a business is registered for VAT in Germany and authorized to charge and report the tax. German businesses are also issued a general tax number by the local tax office, but it is different from a VAT number. The VAT number is specifically used for VAT reporting and for identifying businesses in cross-border EU transactions.

German VAT numbers begin with the country code “DE” followed by nine digits (e.g., DE123456789). This format is fixed and used consistently for domestic and EU-wide VAT reporting. A VAT number must appear on invoices for taxable supplies and is required for intra-EU B2B sales where reverse charge VAT applies and the tax liability shifts to the buyer.

VAT numbers can be verified through EU and German validation systems to confirm that a trading partner is properly registered. Verifying VAT numbers is a standard risk control step for businesses selling to other EU companies.

How do VAT rates differ in Germany?

Germany uses three VAT treatments: a standard rate, a reduced rate, and a zero rate. Some supplies are also exempt from VAT completely. Which one of Germany’s VAT treatments applies depends on what a business is selling and how the supplies are classified under tax law.

Here’s what differentiates VAT rates in Germany.

Standard VAT rate

The default VAT rate in Germany is 19%. It applies to most goods and services, including clothing, electronics, software, digital services, professional services, furniture, and restaurant meals. If a product or service isn’t explicitly listed as eligible for a reduced rate or exemption, it falls into this category.

Reduced VAT rate

A lower rate of 7% applies to specific goods and services considered essential or socially beneficial, such as many basic food items, printed and digital books, newspapers, hotel accommodation, public passenger transport, cultural services such as museum or theater admissions, and certain medical products, including prescription drugs. The definitions are narrow, and small differences in how a product is sold or consumed can change the applicable rate.

Zero-rated transactions

Certain supplies are taxed at 0%, notably exports of goods outside the EU and qualifying cross-border B2B transactions within the EU where the reverse charge applies. In these cases, no German VAT is charged to the customer, but the seller can still reclaim VAT paid on related business expenses.

VAT-exempt supplies

Some activities are exempt from VAT entirely, including many healthcare services, insurance and financial services, education, and specific forms of residential rent. For exempt supplies, VAT is not charged on sales, and input VAT on related costs usually can’t be reclaimed.

Who needs to register for VAT in Germany?

Whether or not your business needs to register for a VAT number in Germany depends on where your business is established, what you sell, and who your customers are. Here are the specifics.

German-based businesses

Companies based in Germany must register for VAT once their annual turnover exceeds the small enterprises threshold. As of 2025, the threshold for registration is €25,000 in the previous calendar year, with an expected turnover of no more than €100,000 in the current year. If your business exceeds these thresholds, you’re required to register.

If your business doesn’t need to register, you can choose not to charge VAT under the small enterprises scheme, but you also lose the ability to reclaim input VAT.

Foreign businesses

Businesses that are not established in Germany generally don’t have a VAT registration threshold. If a foreign business makes taxable items in Germany, such as selling goods located in Germany or delivering services that are taxable locally, it must register for German VAT from the first sale.

Ecommerce sellers and inventory

Storing goods in Germany, including inventory held in fulfillment centers, typically requires VAT registration. This applies even if the business itself is based in another country and sales volumes are low.

EU distance sellers using OSS

EU-based businesses selling online to German consumers can use the EU One-Stop Shop (OSS) scheme once their total cross-border EU sales exceed €10,000 per year. OSS allows VAT to be reported centrally without registering separately in Germany, but it does not apply to goods stored in Germany or certain domestic transactions.

VAT-exempt businesses

Businesses carrying out economic activities in Germany that are entirely VAT-exempt might not be required to register; this depends on the nature of the exemption and whether any taxable transactions occur.

How does VAT compliance work in Germany?

VAT-registered businesses must charge the correct VAT rate on all taxable sales and issue invoices that meet German requirements. Invoices must include the seller’s VAT number, invoice date, a unique invoice number, a clear description of the goods or services, the net amount, and the VAT charged.

VAT collected from customers is treated as output VAT, while VAT paid on business expenses is considered input VAT. Businesses are expected to maintain detailed records of both, supported by valid invoices, and keep those records for up to 10 years.

Preliminary VAT returns are typically filed monthly or quarterly, depending on the business’s VAT liability. New businesses usually file monthly at first, and returns are submitted electronically through the German tax portal. VAT returns and payments are generally due by the 10th day of the month following the reporting period. Businesses can apply for a standing deadline extension, which shifts the deadline by one month but usually requires an advance payment.

In addition to periodic filings, VAT-registered businesses must generally submit an annual VAT return that reconciles all VAT activity for the year. Any differences between the annual return and earlier filings result in either an additional payment or a refund.

Businesses making intra-EU supplies might also need to submit European Commission Sales Lists (EC Sales Lists or ESLs) and, in some cases, Intrastat declarations. These reports don’t usually involve payment but are required for transparency and cross-checking within the EU system.

How do VAT refunds work in Germany?

When input VAT on expenses exceeds output VAT collected from customers in a filing period, the difference can be claimed as a refund through the VAT return. Valid invoices and proof that expenses were business-related are required for all refund claims, and tax authorities can request additional documentation before releasing funds, especially for higher-value claims.

Instead of requesting a cash refund, businesses can also choose to carry excess VAT forward and offset it against future VAT liabilities. This is common for companies with predictable sales cycles or upcoming VAT payments.

A business that is established in another EU country and is not registered for German VAT can reclaim German VAT paid on eligible business expenses through the EU VAT refund system. Claims are submitted via the home country’s tax portal and must generally be filed by September 30 of the following year. A non-EU company can also reclaim German VAT under a separate refund procedure, provided their home country offers reciprocal VAT refunds to German businesses. These claims are filed directly with the German tax authorities and typically have an earlier deadline.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.