German VAT regimes

The German Umsatzsteuer (VAT) is governed by the UStG (Umsatzsteuergesetz) of 1979, amended over 100 times. Five main regimes coexist, each with its specific treatment on the electronic invoice: standard regime, small entrepreneur, margin scheme, farm flat-rate, reverse-charge. Mastery of these regimes is critical for E-Rechnung 2025-2028 compliance.

Legal framework — UStG and UStDV

The German VAT system rests on two foundational texts:

• UStG — Umsatzsteuergesetz. Framework law, 30 sections + annexes, governs concepts (taxable party, supply, service, taxable base, deduction right). Amended by the Wachstumschancengesetz of 27 March 2024 on §14 (electronic invoices) and §27 (transitional clauses).
• UStDV — Umsatzsteuer-Durchführungsverordnung. Implementing decree that details practical modalities. Articles 1 to 81 cover deductible VAT, invoicing, Kleinbetragsrechnungen (invoices < €250), exports.
• BMF Auslegungserlasse. The BMF regularly publishes "schreiben" (letters) that clarify UStG application. The letter of 15 October 2024 on E-Rechnung is the most recent and most important for electronic invoicing.
• EuGH and BFH (case law). EU Court of Justice and Bundesfinanzhof (Federal Fiscal Court) — landmark rulings on grey areas. Particularly important for the §13b reverse-charge scope.

VAT rates

Three rate levels coexist in Germany, complemented by specific exemptions. The structure is simpler than the French (5 rates 0/2.1/5.5/10/20%).

The 5 main regimes

German VAT regimes determine how each taxable party applies Umsatzsteuer in invoices and returns. Selected by option or by obligation based on turnover and activity criteria.

1. Standardbesteuerung (normal regime). Default for any business. Normal UStG application: collection of VAT on sales (Output Tax), deduction of input VAT on purchases (Vorsteuer), monthly or quarterly USt-VA.
2. Kleinunternehmerregelung §19 UStG (small entrepreneur). Optional exemption for small entrepreneurs (cf. dedicated section).
3. Differenzbesteuerung §25a (margin scheme). Compute VAT on the gross margin (sale price - purchase price) for used goods, antiques, works of art (cf. dedicated section).
4. Pauschalierung §24 UStG (farm/forest flat-rate). Flat 9.5% rate (before 31 December 2024: 10.7%, progressive reduction down to 7.8% in 2028) for agricultural and forestry operations instead of the standard regime. Justification: compensation for input VAT without VAT bookkeeping.
5. Reverse-Charge §13b UStG (auto-liquidation). Transfer of the VAT payment obligation from seller to buyer in specific cases (cf. dedicated section).

Kleinunternehmer §19

The Kleinunternehmer (small entrepreneur) regime under §19 UStG is the German equivalent of the French VAT base franchise. Optional, applicable under strict thresholds.

• Threshold: gross turnover year N-1 ≤ €22,000 AND year N forecast ≤ €50,000. Single threshold for all activities (vs France which distinguishes sales/services).
• Consequences: no VAT invoiced to clients, no input VAT deductible on purchases. Mandatory clause on the invoice (cf. clauses section).
• Waiver option. The Kleinunternehmer may voluntarily waive the exemption (§19 (2) UStG) to open the deduction right. Irrevocable for 5 years.
• E-Rechnung impact 2025+: Kleinunternehmer are exempt from issuing structured E-Rechnungen but must be able to receive them. A non-structured PDF invoice remains legal for their own issuance until further notice.

Differenzbesteuerung §25a

The margin scheme (Differenzbesteuerung) under §25a UStG applies to Wiederverkäufer (resellers) of used goods (Gebrauchtgegenstände), antiques, collector items and works of art. VAT is computed on the gross margin (sale price - purchase price) rather than on the total sale price.

• Beneficiaries: professional resellers of used cars, antique dealers, art galleries, used-bike merchants, platforms like Rebuy/Momox. Not open to private individuals nor to new items.
• Calculation: gross margin = sale price - purchase price. VAT = gross margin × 19/119 (extraction of implicit 19% VAT).
• Specific invoice: does NOT carry a VAT mention in clear (banned §14a UStG). Mandatory mention "Sonderregelung für Gebrauchtgegenstände / Margin scheme - Second-hand goods".
• EN 16931 UNCL code: TaxCategory ID = E with TaxExemptionReasonCode = VATEX-EU-132-1F and reason "Sonderregelung §25a". Art. 312 of EU Directive 2006/112/EC frames the margin scheme at EU level.

Reverse-Charge §13b

The Reverse-Charge-Verfahren (self-assessment mechanism) under §13b UStG is the most complex tax regime to manage in German e-invoicing. It transfers the VAT payment obligation from the seller to the buyer.

§13b (2) scope — 14 categories to know:

• §13b (2) No. 1: services between taxable parties intra-EU (since 2002, EU directive harmonisation).
• §13b (2) No. 2: refined gold deliveries ≥ 325 thousandths (since 2007).
• §13b (2) No. 4: construction services (Bauleistungen) between BTP companies — a subcontractor invoicing his BTP client applies reverse-charge if the latter exercises > 10% of his turnover in BTP.
• §13b (2) No. 5: electricity, gas, heat deliveries between taxable parties intra-EU.
• §13b (2) No. 7: B2B telecommunications (since 2015).
• §13b (2) No. 8: precious metals, non-ferrous metals, scrap (since 2014).
• §13b (2) No. 9: building cleaning between cleaning companies (since 2011).
• §13b (2) No. 10: mobile phones, integrated circuits, tablets, game consoles (introduced 2011 against VAT carousel fraud). Threshold: ≥ €5,000 per invoice.
• §13b (2) No. 11: B2B gas and electricity (§13b 5 complements adopted in 2018).
• §13b (2) No. 12: CO2 emission certificates (Emissionszertifikate, anti-carousel-fraud on the EU ETS market).
• §13b (5) and following: particular liability for services acquired from operators established outside the EU (Drittstaaten).

<!-- Standard regime - Standardbesteuerung 19% -->
<cac:TaxTotal>
  <cbc:TaxAmount currencyID="EUR">19.00</cbc:TaxAmount>
  <cac:TaxSubtotal>
    <cbc:TaxableAmount currencyID="EUR">100.00</cbc:TaxableAmount>
    <cbc:TaxAmount currencyID="EUR">19.00</cbc:TaxAmount>
    <cac:TaxCategory>
      <cbc:ID>S</cbc:ID>           <!-- UNCL 5305 "S" = Standard rate -->
      <cbc:Percent>19.00</cbc:Percent>
      <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
    </cac:TaxCategory>
  </cac:TaxSubtotal>
</cac:TaxTotal>

<!-- Kleinunternehmer §19 regime - exempt -->
<cac:TaxTotal>
  <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
  <cac:TaxSubtotal>
    <cbc:TaxableAmount currencyID="EUR">100.00</cbc:TaxableAmount>
    <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
    <cac:TaxCategory>
      <cbc:ID>E</cbc:ID>           <!-- UNCL 5305 "E" = Exempt -->
      <cbc:Percent>0.00</cbc:Percent>
      <cbc:TaxExemptionReasonCode>VATEX-EU-O</cbc:TaxExemptionReasonCode>
      <cbc:TaxExemptionReason>Kleinunternehmer gemäß §19 UStG</cbc:TaxExemptionReason>
      <cac:TaxScheme><cbc:ID>VAT</cbc:ID></cac:TaxScheme>
    </cac:TaxCategory>
  </cac:TaxSubtotal>
</cac:TaxTotal>

<!-- Reverse-Charge §13b regime -->
<cac:TaxCategory>
  <cbc:ID>AE</cbc:ID>             <!-- UNCL 5305 "AE" = VAT reverse charge -->
  <cbc:Percent>0.00</cbc:Percent>
  <cbc:TaxExemptionReasonCode>VATEX-EU-AE</cbc:TaxExemptionReasonCode>
  <cbc:TaxExemptionReason>Steuerschuldnerschaft des Leistungsempfängers gemäß §13b UStG</cbc:TaxExemptionReason>
</cac:TaxCategory>

Mandatory invoice clauses

§14 (4) UStG sets the mandatory clauses on any German invoice. The E-Rechnung reform did not modify this list, but transposed it into the structured EN 16931 context. 10 main clauses:

1. Full name and address of supplier and customer (BT-27/BT-29 + BT-44/BT-45)
2. Steuernummer or USt-IdNr. of the supplier (BT-31 or BT-32)
3. Invoice date (BT-2 IssueDate)
4. Unique sequential invoice number (BT-1 ID)
5. Quantity and description of goods/services (BT-127 LineItem.Name)
6. Delivery date or period (BT-72 ActualDeliveryDate)
7. Net price per line item (BT-146 ItemNetPrice)
8. Applied VAT rate and corresponding VAT amount (BT-119 TaxAmount, BT-118 Percent)
9. Agreed payment date if different from invoice date (BT-9 PaymentDueDate)
10. Specific clause if special regime (Kleinunternehmer, Differenzbesteuerung, Reverse-Charge)

Cross-links

• Germany hub — full e-invoicing mandate
• Wachstumschancengesetz — e-invoicing legal foundation
• ELSTER — USt-Voranmeldung VAT return
• XRechnung — BR-DE VAT rules
• France VAT regimes (comparison)
• UStG — official text (gesetze-im-internet.de)
• UStDV — implementing decree
• BMF — Umsatzsteuer (thematic portal)