Plain-English guide to Umsatzsteuer (USt/MwSt) in Germany — the Kleinunternehmer threshold, 19% rate, registration with the Finanzamt, and Voranmeldung filing.
Last updated: June 2026
Germany's VAT (Umsatzsteuer, abbreviated USt or MwSt) works differently from most countries. There is no formal registration threshold in the standard sense. Instead, Germany has a Kleinunternehmerregelung (small business scheme) that exempts businesses from charging and remitting VAT if their revenue was below €22,000 in the previous calendar year and is expected to stay below €50,000 in the current year.
If you are a new business starting out, you can apply the Kleinunternehmer rule from day one as long as you expect your revenue in your first year to stay below €22,000. If you exceed that in your first year, you lose the exemption for the following year.
Important: Kleinunternehmer exemption is optional — you can waive it and register for VAT even if you're below the threshold. This is worth doing if your customers are mostly VAT-registered businesses (they can recover the VAT you charge), or if you have significant upfront costs where you want to reclaim input VAT.
If you are a foreign business (EU or non-EU) making taxable supplies in Germany, the Kleinunternehmer rule does not apply to you. You must register for German VAT before making your first taxable supply in Germany, regardless of the amount.
The standard rate of 19% applies to most goods and services. The reduced rate of 7% applies to food (in restaurants for takeaway, not dine-in), books, newspapers, public transport, and certain cultural services. Germany does not have a zero rate (unlike the UK or Ireland).
Submit the "Fragebogen zur steuerlichen Erfassung" (questionnaire for tax registration) to your local Finanzamt (tax office). Since 2021, this can be done electronically via ELSTER, Germany's official tax portal. You must register before making your first taxable supply.
On the registration form, you must explicitly state whether you intend to use the Kleinunternehmerregelung. If you waive the exemption (opt into full VAT registration), you are bound by that decision for 5 years. Think carefully before opting out if you're below the threshold.
The Finanzamt will issue your Steuernummer (tax number, for domestic filings) within a few weeks. Once you have a Steuernummer, you can apply for a USt-IdNr (VAT identification number, starting with "DE") for EU cross-border transactions via the Bundeszentralamt für Steuern (BZSt).
All VAT returns (Voranmeldungen) and the annual VAT return (Umsatzsteuererklärung) must be filed electronically via ELSTER. Register for an ELSTER account and link it to your tax number. Most German accounting software (Lexoffice, DATEV, Fastbill) integrates directly with ELSTER.
Filing Voranmeldungen: Most businesses file monthly preliminary VAT returns (Umsatzsteuer-Voranmeldungen) in their first year, due by the 10th day of the following month. After a year of reliable filings, you may be permitted to switch to quarterly filing. An annual VAT return (Umsatzsteuererklärung) is due by 31 July of the following year (or later with a tax advisor).
Invoicing requirements: German VAT invoices must include: your Steuernummer or USt-IdNr, the customer's USt-IdNr (for B2B), a sequential invoice number, date of supply, a precise description of goods/services, the net amount, the applicable VAT rate, and the VAT amount. For invoices under €250, simplified rules apply.
Late filing penalties: Filing late incurs a Verspätungszuschlag (late surcharge) of up to 10% of the tax due, capped at €25,000. Interest accrues at 1.8% per year on unpaid amounts (as of 2022 reform). If you consistently miss deadlines, the Finanzamt can estimate your tax liability (Schätzung), which is rarely in your favour.
It is Germany's small business VAT exemption. If your revenue was under €22,000 last year and you expect under €50,000 this year, you don't charge VAT on your sales and don't file VAT returns. The downside: you also cannot reclaim VAT on your business purchases. Your invoices must state "Gemäß §19 UStG wird keine Umsatzsteuer erhoben" (VAT not charged under §19 UStG).
If you supply taxable services to German business customers (B2B), the reverse charge mechanism usually applies — your German client accounts for the VAT, and you don't need to register. But if you supply services to German consumers (B2C), you must register for German VAT from your first sale. Digital services to EU consumers are handled via the EU OSS scheme.
They mean the same thing. Mehrwertsteuer (MwSt) means "value-added tax" and is the everyday term used in everyday language and on receipts. Umsatzsteuer (USt) is the official legal term used in tax returns, legislation, and official correspondence. Both refer to Germany's VAT system.
Yes. Parent companies and subsidiaries that are financially, economically, and organisationally integrated can form a VAT group (Organschaft). All supplies within the group are disregarded for VAT purposes. The parent files a single consolidated VAT return. This is relevant primarily for larger corporate structures.
Dine-in restaurant food is taxed at 19% (standard rate). Take-away food without on-site consumption is taxed at 7% (reduced rate). This distinction caused significant compliance headaches and many disputes with the Finanzamt in recent years. If in doubt, apply 19%.
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