German VAT: a guide for foreign companies

1. German VAT: three situations, three rules

German VAT treatment comes down to three questions: who is buying, where the goods are shipped from and who handles the import. Everything else follows from these.

German VAT rates

• Standard rate 19 % – most goods and services.
• Reduced rate 7 % – including most food, books, newspapers and certain cultural services.

The scope of the reduced rate differs from that in other countries, and your product’s home-market rate tells you nothing about its German treatment. In food and catering in particular, the dividing lines are detailed – check this product by product before pricing, because a 12-percentage-point difference can wipe out your entire margin.

2. B2B sales: conditions for an intra-community supply

Selling goods from another EU country to a VAT-registered German business is an intra-community supply. You invoice without your home country’s VAT, and the buyer accounts for the tax in Germany under the reverse charge mechanism.

Four conditions that must be met

1. The buyer is VAT-registered in another member state and provides a valid VAT ID. Always check it in the VIES system and save the result – in a tax audit you must be able to show that the check was made at the time of the transaction.
2. The goods are actually transported to another member state.
3. The transport can be proven with documents: a consignment note, a carrier’s confirmation or the buyer’s confirmation of receipt.
4. The sale is reported correctly and on time in the recapitulative statement.

If any of these is missing, the VAT exemption can be refused retrospectively – and the tax falls on you, because it can no longer be collected from the buyer.

Invoice requirements

An invoice for an intra-community supply must show both parties’ VAT IDs and a reference to the reverse charge. The German wording is “Steuerschuldnerschaft des Leistungsempfängers”, and multilingual invoices often use “Reverse charge – innergemeinschaftliche Lieferung”.

Intrastat

Sufficiently large intra-EU flows of goods also require an Intrastat statistical declaration. Thresholds are set per country and reviewed annually, so check the current threshold with your national statistics or customs authority.

3. B2C sales and the OSS scheme

For intra-EU distance sales to consumers there is an annual threshold of €10,000, calculated across all EU countries combined – not per country. The threshold is low: one good season in a German online shop will exceed it.

Below the threshold

Sales are taxed in the country of departure – your home country – at its VAT rate. Nothing special needs to be done.

Above the threshold

Sales are taxed in the buyer’s country – in Germany at 19 or 7 per cent depending on the product. This is handled through the OSS scheme (One Stop Shop): you register for OSS in your home country, report all EU sales in a single return and pay the tax to your own tax authority, which passes it on.

OSS is a major simplification: without it you would need a separate registration in every country you sell to.

Pricing in B2C

In Germany consumer prices must be shown as a total price including VAT, and for many product groups a unit price (Grundpreis, e.g. €/kg or €/l) must also be shown. Shipping costs must be stated clearly. Failing to do so is a typical reason for a warning letter (Abmahnung) in Germany.

4. When you need a German VAT ID

A German registration is typically required in these situations.

• You store goods in Germany. This includes fulfilment warehouses and third-party logistics centres. Even moving goods into your own warehouse in Germany is a taxable event.
• You sell goods already in Germany to German consumers.
• You perform installation or construction services in Germany to which the reverse charge does not apply. The dividing line is fine and depends on the nature of the service and the customer’s status.
• You import goods from outside the EU through Germany in your own name – for example if production is in Asia and imports go through Hamburg.
• You organise events or fairs in Germany where you sell directly on site.

The competent tax office

Germany centralises the VAT affairs of foreign companies by country of residence (§ 1 UStZustV). A selection:

In practice this is good news: all correspondence runs through one office rather than being spread across local authorities. Communication is in German.

Two different numbers

What the application needs

Typically a commercial register extract with translation, a certificate of VAT registration in your home country, a description of your business activities in Germany, an estimate of turnover and contracts or other documents showing the nature of the activity. An incomplete application is the most common cause of delay.

5. Ongoing German VAT filing obligations

Registration isn’t a one-off step but a permanent obligation. That is why unnecessary registration is best avoided.

In the first years of activity, the filing frequency in Germany is typically higher. Late returns attract late filing surcharges, and repeated failures lead to a tax audit.

Record retention

German retention periods are long and also apply to electronic records – invoices, contracts, consignment notes and proof of transport. Archive the transport proof for intra-community supplies systematically in particular, because that is exactly what tax auditors ask for.

6. Austria and Switzerland – different rules

Austria

Austria is an EU member and part of the same system: intra-community supplies and OSS work on the same logic. The rates differ from Germany’s: 20 per cent standard, with reduced rates of 10 and 13 per cent – and since July 2026 a rate of 4.9 per cent for selected basic foods. Registration thresholds and filing frequencies have their own rules. In practice, Austria is the easiest DACH country administratively for companies from other EU countries.

Switzerland

Switzerland is not part of the EU customs union or VAT area. That changes everything:

• Exporting to Switzerland means exporting outside the EU – you need an export declaration, an import declaration and customs clearance.
• Proof of origin is needed so that the preferential tariff under the EU–Switzerland agreement applies. Without it you pay duty unnecessarily.
• A foreign seller may become liable for Swiss VAT once its worldwide turnover reaches CHF 100,000 and it makes taxable supplies in Switzerland. It then needs a Swiss registration and a local tax representative.
• The rates are much lower than Germany’s – 8.1 per cent standard, 2.6 per cent reduced and 3.8 per cent for accommodation – which affects pricing and the attractiveness of consumer sales.

If Switzerland is your target market, treat it as a project of its own rather than an extension of Germany. Logistics, pricing and administration all differ.

7. The other direction: VAT in the Nordics

For companies from the DACH region heading north, the same EU logic applies in Finland, Sweden and Denmark: intra-community B2B supplies under the reverse charge, OSS for distance sales to consumers and a local registration when you store goods in the country. Standard rates are high – 25.5 per cent in Finland and 25 per cent in Sweden, Denmark and Norway.

Norway is the exception: as an EEA country outside the EU customs union and VAT area, it has its own rules, including customs formalities, import VAT and a registration obligation for foreign sellers once sales to Norway exceed NOK 50,000 within twelve months. Read more in our Nordic market entry guide.

8. Six costly German VAT mistakes

1. Not checking the buyer’s VAT ID in VIES. If the ID wasn’t valid at the time of the transaction, the exemption can be refused retrospectively – and you pay the tax.
2. Not archiving proof of transport. The exemption of an intra-community supply requires proof that the goods actually left the country.
3. Assuming OSS covers storage. It doesn’t. Goods in Germany at the time of sale mean a domestic sale in Germany.
4. Assuming the reduced rate based on your home market. The scope of Germany’s 7 per cent rate is different. A 12-point error wipes out the margin.
5. Registering just in case. An unnecessary registration brings permanent filing obligations and costs that are hard to get rid of.
6. Registering late. If the obligation arose months ago, returns and tax are late too. Fixing it is always more expensive than acting in time.

Where to start

First establish where your goods are actually shipped from and where they are at the time of sale. That decides almost everything else. We go through this in a free call – see company set-up and registrations or book a call.