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Germany VAT Guide (Umsatzsteuer 2026)

A comprehensive guide to German value-added tax (Umsatzsteuer) — the standard 19% rate, reduced 7% rate on food, books, and hotels, the €22,000/€50,000 Kleinunternehmerregelung threshold, VAT registration, and electronic filing via ELSTER.

Germany's Umsatzsteuer (USt) is a consumption tax that applies to most goods and services supplied within the country. It is governed by the Umsatzsteuergesetz (UStG) and harmonised with EU VAT directives. The tax is charged at each stage of the supply chain, with businesses entitled to recover input VAT (Vorsteuerabzug). For related reading, see our Small Business VAT Guide → and E-Commerce VAT Guide →.

VAT Rates in Germany (2026)

  • Standard rate (Regelsteuersatz): 19% applies to most goods and services — electronics, clothing, cars, professional services, restaurant meals (except takeaway), alcohol, tobacco, and general retail.
  • Reduced rate (Ermäßigter Steuersatz): 7% applies to essential goods and services — food (excluding luxury items), books, newspapers, magazines, hotel accommodation, public transport (trains and buses over short distances), cultural events (theatre, concerts, museum tickets), and medical equipment. The reduced rate also applies to live-streamed cultural events since 2024.
  • Other rates: Some supplies are exempt with input VAT deduction (e.g., exports, intra-EU deliveries). Others are exempt without input VAT deduction (e.g., health insurance services, rental of residential property, financial services). The reverse charge (Reverse-Charge-Verfahren) applies to B2B construction services, real estate transactions, and certain cross-border services.

VAT Registration and Returns

  • Registration threshold: You must register for VAT (Umsatzsteuer-Identifikationsnummer) if your turnover exceeded €22,000 in the prior year AND is expected to exceed €50,000 in the current year. Below this, you may qualify for the Kleinunternehmerregelung (§19 UStG).
  • VAT returns (Umsatzsteuervoranmeldung): Filed electronically via ELSTER (the German tax authority's online portal). Monthly filing is required if the VAT due for the prior year exceeded €7,500. Quarterly filing applies if VAT due was between €1,000 and €7,500. An annual VAT return (Umsatzsteuerjahreserklärung) must be filed by July 31 of the following year.
  • Vorsteuerabzug (input VAT recovery): Businesses can recover VAT paid on purchases related to their taxable supplies. To claim input VAT, you need a proper invoice (Rechnung) showing the supplier's USt-IdNr., your USt-IdNr., the net amount, VAT rate, and VAT amount. Simplified invoices for amounts under €250 have less strict requirements.
  • Penalties: Late filing of Voranmeldungen results in Verspätungszuschlag (late filing penalty) of 0.25% of the assessed VAT per month (min €25/month). Late payment incurs Säumniszuschlag (late payment penalty) of 1% per month. Interest (Nachzahlungszinsen) of 0.15% per month (1.8% p.a.) accrues on underpayments after 15 months from the end of the calendar year.