If you sell goods or services to customers in Germany — from anywhere in the world — you may have a German VAT obligation. Most foreign businesses discover this later than they should: when a German customer asks for a local VAT number, when a fulfilment platform flags a compliance issue, or when a letter arrives from the Finanzamt. This guide covers the essentials: when German VAT applies, what the rules actually require, and where most businesses run into trouble.
The core question: does German VAT apply to your business?
German VAT — Umsatzsteuer — is governed by the Umsatzsteuergesetz (UStG) and applies at a standard rate of 19%, with a reduced rate of 7% for certain categories including food, books, and public transport. Whether it applies to your business depends on three things: where your customers are located, whether they are businesses or private consumers, and what you are supplying.
The starting point is the concept of place of supply. If the place of supply of your goods or services is determined to be Germany, German VAT applies. Determining this is straightforward in some cases and technical in others. Getting it wrong in either direction creates problems: under-charging creates a backdated liability; over-charging creates an unnecessary administrative burden and a customer relations issue.
B2B or B2C: the distinction that changes everything
The most important variable is whether you are selling to businesses or to private consumers (Verbraucher). This single distinction determines which rules apply — and in many cases, whether you have any obligation in Germany at all.
For B2B supplies of services, the general rule under EU VAT law — implemented in Germany via §3a UStG — is that the place of supply is where the customer is established. When a foreign business provides services to a German VAT-registered business, the German customer accounts for VAT themselves under the reverse charge mechanism (Umkehr der Steuerschuldnerschaft). The foreign supplier invoices without VAT and has no registration obligation in Germany for those supplies. The German business self-assesses and reports.
For B2C supplies — sales to private individuals — the place of supply is generally where the customer is located. This means German VAT applies to sales made to German consumers, and you are responsible for accounting for it.
The picture is different for B2B supplies of goods. If you are selling and shipping physical goods from another EU member state to a German VAT-registered business, your customer accounts for VAT in Germany via the intra-community acquisition rules — you issue a zero-rated invoice and the German buyer self-assesses. If you are shipping goods from outside the EU, import VAT (Einfuhrumsatzsteuer) arises at the point of customs clearance in Germany. This is typically paid by the importer of record — which may be your German customer or, depending on your delivery terms (DDP vs DAP), yourself. If you are the importer of record, you will need a German VAT registration to reclaim that import VAT as input tax.
One critical nuance: the reverse charge only works if the German customer is VAT-registered. Sole traders operating below the Kleinunternehmerregelung threshold, public bodies acting in their public capacity, and other non-VAT-registered buyers do not qualify. Before relying on reverse charge for a B2B transaction, ask for your customer’s Umsatzsteuer-Identifikationsnummer (USt-IdNr.) and verify it through the EU VIES system.
The One-Stop Shop: the EU’s answer to B2C compliance
Since July 2021, the EU’s One-Stop Shop (OSS) scheme has significantly simplified cross-border B2C VAT compliance for EU-based businesses. Instead of registering for VAT in every EU member state where you have customers, you can declare and pay VAT for all your EU B2C supplies through a single return filed in your home member state.
The threshold that triggers this obligation is €10,000 per calendar year across all EU B2C supplies combined — but this threshold applies only to businesses established within the EU. Below it, you may apply your home country’s VAT rate. Once you exceed it — or if you opt in voluntarily — destination-country rates apply, and OSS is the practical mechanism for compliance.
For EU-based businesses selling goods or digital services to German consumers, OSS is almost always the right answer. It avoids the cost and administrative burden of local registration while keeping you fully compliant.
For non-EU businesses, the position is different. The Union OSS is not available. However, the Import One-Stop Shop (IOSS) covers goods in consignments with an intrinsic value below €150 sold to EU consumers. For digital and electronically supplied services, non-EU businesses can use the non-Union OSS scheme. For other scenarios — including goods above the IOSS threshold — direct German VAT registration is likely required. One further development to note: from 1 July 2026, the EU is introducing a flat €3 customs duty per item on sub-€150 goods shipped by non-EU sellers registered in IOSS. This does not change the VAT position — IOSS continues to apply — but it is a separate customs cost that non-EU sellers shipping directly to EU consumers will need to account for.
When you need to register for VAT directly in Germany
OSS covers most B2C e-commerce scenarios for EU businesses, but not all of them. The following situations require direct German VAT registration, regardless of your location or turnover level:
You are storing goods in Germany. This is the most common trigger for unexpected registration obligations. If you use a warehouse, a third-party logistics provider, or a fulfilment centre — including Amazon FBA — that holds your inventory on German soil, you have a registration obligation immediately. This applies whether you are selling B2B or B2C, and regardless of any turnover threshold. The obligation arises from the physical presence of your goods, not from any sales volume.
You are supplying goods from a German location. Any domestic supply of goods within Germany requires local registration.
You are providing certain services where the place of supply is Germany. Some service categories fall outside the general B2B/B2C place-of-supply rules: construction and installation services, cultural and entertainment events, and certain real estate-related services can all trigger a German registration obligation, regardless of whether your customer is a business or a consumer.
You are a non-EU business outside the OSS framework. If you supply digital services to German consumers and are not eligible for OSS, direct German registration or non-Union OSS registration is required.
What registration involves
For all non-resident businesses — whether established in the EU or outside it — the competent authority is a designated Finanzamt allocated based on the company’s country of establishment. The BZSt publishes and maintains the allocation: for example, UK-established businesses are assigned to the Finanzamt in Hanover, US-established businesses to the Finanzamt in Bonn. The Steuernummer is issued by the allocated Finanzamt; the USt-IdNr. is issued separately by the BZSt. All registration forms and correspondence are in German only.
Unlike many other EU member states — France, Italy, and Spain among them — Germany does not require non-EU businesses to appoint a fiscal representative as a condition of VAT registration. You may still choose to work with a German tax adviser to navigate the process, but this is a practical choice rather than a legal requirement.
Once registered, you will receive a Steuernummer and, where applicable, a Umsatzsteuer-Identifikationsnummer (USt-IdNr.) for intra-EU transactions. Your ongoing obligations will include:
Voranmeldungen (advance VAT returns) — the filing frequency depends on your prior-year VAT liability. Above €9,000: monthly. Between €2,000 and €9,000: quarterly. Below €2,000: the Finanzamt may release you from the obligation entirely. These thresholds were updated as of 1 January 2025 by the Fourth Bureaucracy Relief Act (BEG IV). All returns must be filed electronically via the ELSTER portal.
Umsatzsteuerjahreserklärung — an annual VAT return filed after the close of each fiscal year.
Zusammenfassende Meldung (EC Sales List) — required for intra-EU B2B supplies, filed monthly or quarterly depending on volume.
Common mistakes — and how to avoid them
Assuming reverse charge always applies. It only applies where the German customer is VAT-registered. If you cannot verify a USt-IdNr., treat the supply as B2C and charge accordingly.
Ignoring warehousing and FBA obligations. Storing goods in Germany — even temporarily — creates an immediate registration requirement. This is one of the most frequent compliance failures among international e-commerce businesses. It is not threshold-based: the obligation arises on day one, from the fact of storage alone.
Missing the OSS threshold. If your EU-wide B2C sales exceed €10,000 in a calendar year, destination-country VAT rates apply. Many businesses continue applying their home-country rate after crossing this threshold without realising it.
Conflating the rules for digital services with the rules for physical goods. Place-of-supply rules, simplification mechanisms, and thresholds differ by type of supply. A business selling software subscriptions and a business shipping physical products face different obligations, even if both are selling to German consumers.
Leaving it until a problem forces the issue. German tax authorities take VAT compliance seriously. Missed registration obligations attract backdated liability, interest, and potential penalties. If you are uncertain whether you have a German VAT obligation, the cost of getting advice early is considerably lower than the cost of rectifying a missed registration after the fact.
If you have questions about your VAT position in Germany, get in touch.