Germany charges VAT, called Umsatzsteuer in law and Mehrwertsteuer in everyday speech, at two main rates: 19 percent standard and 7 percent reduced. This guide explains what each rate covers, how to move between netto and brutto prices without errors, and when a freelancer can stay out of VAT under the Kleinunternehmer rule.
Search intent: you want the correct German VAT rate, the netto to brutto formulas, and whether you must charge VAT at all. All three are below, with a worked mixed-rate invoice.
Rates last reviewed: October 2026. Rates are set by Section 12 of the German VAT Act (UStG), published on the federal Gesetze im Internet service, and the small business thresholds by Section 19 UStG.
What are the VAT rates in Germany?
Germany charges Umsatzsteuer at two main rates: 19 percent standard on most goods and services, and 7 percent reduced on items listed in Section 12 and Annex 2 of the VAT Act, such as basic food, books and short-term accommodation. Qualifying solar supplies carry 0 percent.
| VAT rate | Name | Typical examples |
|---|---|---|
| 19 percent | Standard rate (Regelsteuersatz) | Most professional services, including consulting, design, coaching and development, plus clothing, electronics, furniture, alcohol and drinks, and most other goods and services |
| 7 percent | Reduced rate (ermäßigter Steuersatz) | Basic foodstuffs, books, newspapers and magazines (including e-books), short-term hotel and holiday accommodation, passenger transport, theatre, concert and museum tickets, and, from 1 January 2026, restaurant and catering food |
| 0 percent | Zero rate, narrow scope | Qualifying supplies and installation of photovoltaic (solar) systems for homes under Section 12(3) UStG. Exports and intra-EU business supplies are not a general zero rate: they are exempt with input VAT recovery, which is a different legal treatment |
As a freelancer, the rate that matters most is usually 19 percent. Professional services are standard-rated unless a specific provision in Section 12 or Annex 2 puts what you supply in the reduced band. The rate follows what you supply, not who you supply it to and not what your client does with it.
Watch out: Restaurant and catering food moved back to 7 percent on 1 January 2026, after two years at 19 percent. Drinks served with the meal stay at 19 percent, so a restaurant invoice now splits food and drinks onto separate lines at separate rates. Older rate lists that show all restaurant sales at 19 percent are out of date.
Two traps catch freelancers again and again. Accommodation extras that are not the stay itself, such as breakfast or parking, are taxed separately and usually at 19 percent. And an e-book can be 7 percent, while software and streaming are 19 percent. If your offer bundles both, split the lines.
What is the difference between netto and brutto?
Netto is the price before VAT and brutto is the price including VAT. German businesses quote, book and file using netto figures, while prices shown to consumers are normally brutto. You add VAT to a netto price and divide a brutto price to remove it, never subtract the percentage.
The three formulas are simple:
- Add VAT: Brutto = Netto x (1 + rate). At 19 percent, Brutto = Netto x 1.19. At 7 percent, Brutto = Netto x 1.07.
- VAT amount: VAT = Netto x rate. At 19 percent, VAT = Netto x 0.19.
- Remove VAT: Netto = Brutto / (1 + rate). At 19 percent, Netto = Brutto / 1.19.
The removal step is where most errors happen. Never work out the netto price by taking 19 percent off the brutto price. A brutto price already contains VAT calculated on the smaller netto base, so the VAT inside it is less than 19 percent of the brutto figure.
Use LancerBill’s VAT calculator to add or remove German VAT at either rate. LancerBill’s VAT calculator uses the divide, not subtract, method for you, which is the method the worked example below uses.
Worked example: a mixed-rate German invoice
Assumptions, named up front: you are a Germany-based freelance designer, registered for VAT (not a Kleinunternehmer), invoicing a German business client in October 2026. Your invoice has two lines at two different rates, which is common and completely allowed, as long as each line shows its own rate and VAT amount.
Line 1: brand design project, standard rate
Netto price: 2,500 euros
VAT at 19 percent: 2,500 x 0.19 = 475 euros
Brutto: 2,500 + 475 = 2,975 euros
Line 2: printed brand handbook (a book), reduced rate
Netto price: 300 euros
VAT at 7 percent: 300 x 0.07 = 21 euros
Brutto: 300 + 21 = 321 euros
Invoice totals
Total netto: 2,500 + 300 = 2,800 euros
Total VAT: 475 + 21 = 496 euros
Total brutto: 2,800 + 496 = 3,296 euros
Now run it backwards, the way you would when a client gives you a brutto budget. If the client says the design work can cost 2,975 euros brutto at most, the netto amount is 2,975 / 1.19 = 2,500 euros, and the VAT inside it is 475 euros. If you had wrongly taken 19 percent off 2,975, you would have written 2,409.75 euros netto and short-changed yourself by 90.25 euros on one line.
For the handbooks, 321 / 1.07 = 300 euros netto, and the VAT inside is 21 euros. Each rate has its own extraction fraction, which is the shortcut in the next section.
Tip: Build the invoice line by line, never as one blended rate. A single invoice can carry several VAT rates, but a single line cannot. If you sell a package that mixes rates, split it into lines before you invoice, using LancerBill’s invoice generator to keep each line, rate and VAT amount separate and clear.
How do you extract VAT from a brutto price?
To extract VAT from a brutto price, divide the brutto amount by 1 plus the rate to get the netto amount, then subtract. Equivalently, the VAT inside a brutto price equals the brutto amount multiplied by rate divided by 100 plus rate, so 19 divided by 119 at standard rate.
| Rate | Get netto from brutto | VAT inside brutto | Example: 119 euros brutto at 19 percent, 107 euros at 7 percent |
|---|---|---|---|
| 19 percent | Brutto / 1.19 | Brutto x 19/119 | Netto 100.00, VAT 19.00 (on 119 euros brutto) |
| 7 percent | Brutto / 1.07 | Brutto x 7/107 | Netto 100.00, VAT 7.00 (on 107 euros brutto) |
For a round 100 euro brutto price, the same maths gives you netto of 84.03 euros and VAT of 15.97 euros at 19 percent (100 / 1.19 = 84.03), and netto of 93.46 euros and VAT of 6.54 euros at 7 percent (100 / 1.07 = 93.46). Keep the fractions, not the percentages, in your notes: 19/119 and 7/107.
Do freelancers in Germany have to charge VAT?
Not always. Under the Kleinunternehmer rule in Section 19 of the VAT Act, a small business in Germany does not charge VAT if its turnover was no more than 25,000 euros last year and stays at or below 100,000 euros this year. In return, it cannot reclaim input VAT.
These thresholds apply from 1 January 2025 and are measured on turnover, not profit. Before 2025 the figures were 22,000 and 50,000 euros, so older guides understate them. Two details in the current rule matter more than the headline numbers:
- The current-year limit is a hard ceiling, not a forecast. The transaction that takes your current-year turnover over 100,000 euros is itself taxed under the normal rules, and so is everything after it. There is no waiting until year end.
- Your invoices must not show VAT. A Kleinunternehmer invoice shows no VAT amount and carries a note that no VAT is charged under Section 19 UStG. Showing VAT you were not entitled to charge creates a liability for that amount anyway.
The rule is for businesses established in Germany. If you are based outside Germany, different rules can apply from your first sale, so take advice before your first invoice.
Tip: If you use the Kleinunternehmer rule, track turnover monthly, not yearly. A strong quarter can take you close to 100,000 euros with no warning, and the invoice that crosses the line needs normal VAT treatment from that transaction onward.
If you are VAT-registered, you file advance VAT returns (Umsatzsteuer-Voranmeldung) through ELSTER, monthly or quarterly depending on how much VAT you owed in the previous year, due by the 10th day after the end of the period, plus an annual VAT return. Kleinunternehmer are exempt from the advance returns.
Should you stay a Kleinunternehmer or register voluntarily?
Staying under the threshold is not automatically the best outcome. The right answer depends on who your clients are and how much VAT you pay on costs. Use this decision framework, which most rate guides do not give you.
| Your situation | Kleinunternehmer usually suits you if | Voluntary registration usually suits you if | Watch point |
|---|---|---|---|
| Clients are mainly private individuals (B2C) | You stay cheaper on the final price, because you add no VAT | Rarely, unless your costs carry heavy VAT | Crossing 100,000 euros forces a price rise or a margin cut mid-year, from one invoice to the next |
| Clients are mainly VAT-registered businesses (B2B) | Simplicity is your only real gain | Clients reclaim your VAT anyway, so charging it costs them nothing, and you reclaim VAT on your costs | You must file advance returns and show your Steuernummer or USt-IdNr on invoices |
| Your costs carry a lot of VAT (equipment, software, rent) | Your costs are low, so there is little to reclaim | Reclaiming input VAT (Vorsteuer) can be worth more than the admin | As a Kleinunternehmer, input VAT is a real cost. Price it in |
| You expect to pass 25,000 euros next year or grow fast | Growth is slow and you can plan the crossing | You want a controlled start date instead of a mid-contract switch | Opting into normal taxation binds you for a set period (five calendar years under Section 19), so treat it as a long-term choice |
Compare this with France TVA rates and the franchise en base and UK VAT rates 2026/27, and with Ireland VAT rates if your clients are across the Irish Sea. The logic is the same: the threshold is a pricing decision, not just a form. Our guide on whether UK freelancers need to charge VAT covers the same trade-off.
What must a German VAT invoice show?
A German VAT invoice must show both names and addresses, your tax number or VAT ID, a unique sequential invoice number, the issue date, the supply date, a description, the netto amount, the VAT rate and the VAT amount. Section 14 of the VAT Act sets this list.
In full, Section 14(4) requires your Steuernummer (tax number) or USt-IdNr (VAT ID, starting DE), the date or period of supply, the quantity and type of goods or scope of services, and the netto amount split by rate. If the reverse charge applies, as on many cross-border B2B services, the invoice must say so, show the client’s VAT ID, and charge no German VAT.
Three habits prevent most German invoicing problems:
- Quote netto, confirm brutto. In B2B quotes, state the netto price and the VAT rate in words, so the client is never surprised by the brutto total. A quote from LancerBill’s quote generator can carry both figures before the work starts.
- Split mixed supplies into lines. As the worked example showed, one blended rate on a mixed supply is an error waiting for an audit.
- Be ready to receive e-invoices. Since 1 January 2025, businesses in Germany must be able to receive structured electronic invoices for domestic B2B sales. Per the Federal Ministry of Finance e-invoice FAQ, Kleinunternehmer are exempt from issuing e-invoices but must still be able to receive them. A plain PDF is not an e-invoice.
Exports outside the EU and qualifying intra-EU business supplies are exempt with input VAT recovery, while many health, education and financial services are exempt without it. Confirm the treatment before your first cross-border invoice.
Key takeaways
- Germany has two main VAT rates: 19 percent standard and 7 percent reduced, set by Section 12 UStG. Most freelance services are 19 percent.
- Netto is before VAT and brutto includes it. Add with Netto x (1 + rate), remove with Brutto / (1 + rate), never by subtracting the percentage.
- The VAT inside a brutto price is Brutto x rate / (100 + rate): 19/119 at standard rate and 7/107 at the reduced rate.
- Restaurant and catering food returned to 7 percent on 1 January 2026, but drinks stay at 19 percent.
- Kleinunternehmer thresholds since 2025 are 25,000 euros for the prior year and 100,000 euros for the current year. Passing 100,000 euros ends the status from that transaction.
- As a Kleinunternehmer you charge no VAT and reclaim none. For B2B freelancers with VAT-heavy costs, voluntary registration often wins.
Trading with Dutch clients instead? Our Netherlands VAT (BTW) guide explains the 21 and 9 percent rates, how to add and remove BTW, and when Dutch freelancers must register.
For another multi-rate EU system, see how Spain’s IVA rates apply to freelancers and autonomos.
Frequently asked questions
What is the VAT rate in Germany in 2026?
The standard VAT rate in Germany is 19 percent, with a reduced rate of 7 percent for items listed in Section 12 and Annex 2 of the VAT Act, such as basic food, books and short-term accommodation. Qualifying solar supplies carry a 0 percent rate under Section 12(3).
How do I calculate 19 percent VAT on a price?
Multiply the netto price by 0.19 for the VAT amount, and by 1.19 for the brutto total. For example, 1,000 euros netto x 0.19 = 190 euros VAT, giving 1,190 euros brutto. To reverse it, divide the brutto price by 1.19: 1,190 / 1.19 = 1,000 euros netto.
What is the difference between Mehrwertsteuer and Umsatzsteuer?
They are the same tax. Umsatzsteuer is the legal name used in the VAT Act (UStG) and on official filings. Mehrwertsteuer, often shortened to MwSt, is the everyday term clients see on invoices and receipts. Your calculations and filings use the same 19 and 7 percent rates either way.
Which goods and services are taxed at 7 percent in Germany?
The 7 percent rate covers basic foodstuffs, books, newspapers and magazines including e-books, short-term hotel and holiday accommodation, passenger transport, theatre, concert and museum tickets, and, since 1 January 2026, restaurant and catering food. Drinks, including drinks served with a restaurant meal, stay at 19 percent.
How do I remove VAT from a brutto price in Germany?
Divide the brutto price by 1 plus the rate: by 1.19 at 19 percent or 1.07 at 7 percent. Never subtract the percentage from the brutto price, because the VAT was calculated on the smaller netto base. On 119 euros brutto at 19 percent, netto is 100 euros and VAT is 19 euros.
When does a German freelancer have to start charging VAT?
A Germany-based small business can use the Kleinunternehmer rule in Section 19 UStG while prior-year turnover is no more than 25,000 euros and current-year turnover stays at or below 100,000 euros. The transaction that passes 100,000 euros is taxed under the normal rules, and VAT registration and filing apply from there.
This guide is for general information only and is not financial, tax or legal advice.