Which VAT rate to charge as freelancer in Germany?

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Becoming a freelancer in Germany means that you are going to get paid at some point. On your invoice, you need to know which VAT rate to charge in Germany, to local client & to clients abroad.

Which vat rate germany as a freelancer

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Bastien – Settle in Berlin

19% VAT for most freelancers, most of the time

It’s no secret that paying tax in Germany isn’t the most straightforward activity, and paying VAT is no different. In Germany, the VAT tax act (§ 12 UStG and § 12 UStG) defines the following:

  • 19% as a standard rate for the vast majority of goods and services.
  • 7% as a reduced rate.
  • VAT exemption on selected services and goods.

When is charging 7% VAT applicable?

It’s important to remember that the reduced tax rate does not apply to titles or professions, but to specific goods and services. If you provide a range of different services, you might end up charging different VAT rates depending on what the services are. 

Some goods that are eligible for the reduced VAT rate include:

  • Food and drinks:
    • Basic groceries (bread, meat, veggies).
    • Water (bottled/tap).
    • Takeaway food not consumed on-site.
    • Baby food, dietary products.
  • Cultural services:
    • Entry to museums, zoos, theaters, concerts, cinemas.
    • Fees for cultural/educational events.
  • Printed and digital media:
    • Books, newspapers, magazines (physical/digital).
    • Audiobooks equivalent to printed books.
  • Transportation:
    • Local/regional public transport.
    • Long-distance train tickets (>50 km).
  • Healthcare:
    • Prescription medications.
    • Medical aids (wheelchairs, prosthetics).
  • Agriculture:
    • Live animals for farming.
    • Raw agricultural, forestry, and fishing products.
  • Accommodation:
    • Overnight stays at hotels, hostels, guesthouses (excludes extra services).
  • Charitable services:
    • Non-profit social/charitable organization activities.

If you are not sure which rate applies:

Of course, the above examples are a guideline, and it might be difficult to know exactly which VAT rate to charge for the specific services of your business. In this case, it’s better to

If you’re still unsure how much VAT to charge, it’s always better to go with 19% just to be safe. If you charge 7% VAT when you should have charged 19%, and happen to get audited by the Finanzamt, they will tell you to pay back the 12% difference. At this point it would be too difficult to change the invoice and get the tax back from your client, and so you would likely end up paying for it yourself.

When do I charge 0% VAT rate in Germany?

There are also certain cases in which you might not have to pay any VAT at all.

  • If you’re a small business owner (Kleinunternehmer) that had a turnover in the previous year of less than 25,000 euros and is unlikely to turn over 100,000 euros in the current year, then you’re exempt from paying VAT. This means you don’t have to worry about getting the right VAT right, showing VAT on your invoices, or making advanced VAT declarations every month. This doesn’t mean you don’t have to pay income tax, however. 
  • Exports: Goods and services provided to clients outside the EU.
  • Intra-EU B2B transactions: Services to EU clients with a valid VAT ID (reverse charge mechanism applies).
  • Medical services
  • Education: Courses or training provided by accredited institutions.
  • Financial and insurance services: Banking, insurance, and related consulting services.
  • Postal services: Official postal services (Deutsche Post).
  • Charitable and non-profit activities:

What VAT rate should I charge for customers located abroad?

If you provide services to customers in the EU, you don’t have to charge any VAT because of reverse chare mechanism (article 194 of the EU VAT directive). This article states that when invoicing for services to other EU member states, you just have to include a line on your invoice that says something along the lines of, “the reverse charge procedure applies to this invoice, no VAT is applicable.”

We show you how exactly in this article about formatting an invoice in Germany.

How should the VAT rate be displayed on the invoice?

As a freelancer or self-employed person, you’re pretty much playing the role of a tax collector for the Finanzamt, so it’s important that you charge and pay your VAT in the correct manner. All of the services that you’re charging for should be clearly stated on the invoice, along with the amount that you’re charging. 

If you’re applying a standard VAT rate like 19%, simply multiply the net subtotal of the invoice by 19%. Write down the VAT below the net amount, then add the two together to get your gross total. It should look something like this:

Service 1 - XXX: 50.00 EUR

Service 2 - XXX: 50.00 EUR

Total amount (Net): 100.00 EUR

VAT 19%: 19.00 EUR

Total amount (Gross): 119.00 EUR

If you’re invoicing for a number of services with different VAT amounts, then each invoice line should clearly state the different tax rate. If no VAT is shown, the reason for the tax exemption must be stated on the invoice. You can read here a complete view on how to format an invoice in Germany.

FAQs about VAT for freelancers in Germany

How often do I have to submit VAT returns?

Depending on your revenue, you’ll usually file monthly or quarterly VAT pre-returns (Umsatzsteuervoranmeldung) through ELSTER. An annual VAT return (Umsatzsteuerjahreserklärung) is also required.

Can I claim VAT on business expenses as a freelancer?

Yes, if you are VAT-registered, you can deduct input VAT (Vorsteuer) from most business-related purchases, such as software, office equipment, or professional services. More info deductible expenses here.

What if I accidentally charge VAT when I’m under the Kleinunternehmerregelung?

If you mistakenly include VAT on your invoices as a Kleinunternehmer, the tax office will expect you to remit that VAT, even though you shouldn’t have charged it. You must correct the invoices and notify your Finanzamt.

How do VAT rules differ for digital services?

If you sell digital products (e-books, online courses), VAT is charged based on the customer’s location, not yours. The OSS (One-Stop Shop) system simplifies reporting across EU countries.

Sources and references:

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