Value Added Tax (VAT)

Value-added Tax (VAT)

Value-added Tax in Germany

Companies must add value-added tax (VAT) to their prices. Thus, VAT is only paid by the end user of a product or service. Companies transfer the VAT received to the tax authorities on a monthly, quarterly, or annual basis. The frequency generally depends on the level of company turnover.

The normal VAT rate of 19 percent is just below the European average. A reduced rate of 7 percent applies to certain consumer goods and everyday services (such as food, newspapers, local public transport, and hotel stays). Some services (such as bank and health services or community work) are completely VAT exempt.

VAT Rates of Selected EU States (in %) | © European Commission, January 2017

Value-added tax which is collected has to be paid to the responsible tax office on a monthly, quarterly or annual basis. The exact time frame depends on the company's level of turnover.

The official German term for VAT is Umsatzsteuer (USt), but it was originally called Mehrwertsteuer (MwSt) and is often still referred to by this name.


Christina Schön Christina Schön | © GTAI/ Illing & Vossbeck Fotografie

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Christina Schön

Udo Sellhast Udo Sellhast | © GTAI

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Udo Sellhast

Business Information

Interested in basic guidelines for doing business in Germany? This section gets you started.