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Wat are the VAT rates in Germany?
The time when consumers only bought in their own country and companies only traded with domestic firms is over. There has always been trade with neighbouring countries. With online shopping gaining popularity, borders are disappearing. It is therefore good to pay attention to the VAT rates in neighbouring countries. This article therefore pays special attention to the VAT rate in Germany.
VAT is called "Mehrwertsteuer" in Germany. This word means that it is a value added tax. In its present form, VAT was introduced in what was then West Germany (BRD). This was in response to European legislation introduced in 1968. In its modern form, the German VAT rate has existed since this year. However, the VAT rate in Germany as we know it today has not always been advantageous.
The rate was in fact raised six months after its introduction. Nevertheless, in certain cases the German VAT rate may be lower than in the Netherlands or in other neighbouring countries. For consumers, the low VAT rate in Germany seems attractive. Unfortunately, there is more to it than meets the eye. Before you know it, you find yourself unsuspectingly caught up in a VAT carousel.
Overview of German VAT rates
As in the UK, Germany has three VAT rates: general, low and zero. The regulations in this regard are also similar. The percentages and, as a result, the amounts are somewhat different, which is why we would like to give you the following overview:
• The general VAT rate in Germany is 19%, which is 1% lower than the comparable rate in the UK.
• The low VAT rate in Germany is 7%.
• The zero rate also exists as a VAT rate in Germany.
When is which German VAT rate used?
Here, too, we find striking similarities with the application of VAT rates in the UK:
• The high rate is to a large extent like the general rate and is used for the so-called luxury products.
• The low rate is usually used for basic products such as food.
• The zero rate is often used for foreign trade. VAT not paid in Germany must then be paid in the country of origin.
If you would like to know more about the current VAT rate in Germany, please refer to the relevant page of wikipedia.
How to calculate German VAT
The Value Added Tax (VAT) is calculated directly on the sale price of the product / service concerned. As an entrepreneur, you must therefore know the valid VAT rate for your activity and mention on your invoice:
- the net sale price with VAT excluded
- the rate of VAT applied
- the amount of VAT that this represents
- the total sale price with all taxes included (VAT included)
Calculation of VAT from the net price
The calculation of the VAT amount based on the price excluding VAT is calculated as follows:
standard rate: (net price exclusive of VAT / 100) x 119 = total price with VAT
reduced rate: (net price exclusive of VAT / 100) x 107 = total price with VAT
Calculation of VAT from the total price
The calculation of the amount of VAT based on the all inclusive price is as follows:
standard rate: total price inclusive of VAT / 1,19 = net price without VAT
reduced rate: total price inclusive of VAT / 1,07 = net price without VAT