VAT: rates and basic terms

In short: Value added tax (VAT) is a consumption tax on supplies of goods and services. In Germany the standard rate is 19 %, the reduced rate 7 %.

In more detail: Businesses remit the tax; end customers bear it through the price. Between businesses, input tax deduction balances it: VAT paid on purchases is offset against VAT collected. Only the difference goes to the tax office.

Not tax advice.

Our context: The invoice generator calculates net, VAT and gross in both directions and supports 19 %, 7 %, 0 %, small business (small business regulation) and reverse charge.

In Depth

• Net, gross: gross = net × (1 + rate). Net = gross ÷ (1 + rate). €119 gross becomes €100 net and €19 tax at 19 %.
• Reduced (7 %): among others food, books, local passenger transport. Special rules apply to many products.
• Tax-exempt: among others exports to third countries, certain medical treatments.
• Reverse charge: For services to businesses in other EU countries, the recipient owes the tax. The invoice carries a note.
• OSS (one-stop shop): Whoever supplies private customers in other EU countries can report those countries’ VAT centrally.
• Advance return: Standard-rate businesses report monthly or quarterly.
• VAT ID and tax number: You need the VAT ID for business with other EU countries.

See also: Writing an invoice (mandatory details under § 14 UStG), Small business regulation