Understanding VAT Rates in Germany

Germany applies a standard VAT rate of 19% and a reduced rate of 7% for essential goods like food, books, and newspapers, with special rules for certain industries. Since January 1, 2024, restaurant food consumed on-site is taxed at 19%, while takeaway food is taxed at 7%, and beverages generally incur 19%, with exceptions for dairy-based drinks. These VAT rules directly impact business pricing strategies and must be clearly shown on all invoices and receipts as required by law.

 

There are various taxes in Germany that apply either to legal entities or to economic transactions (like VAT). All taxes are governed by their own legal frameworks.

For businesses, tax rates significantly affect pricing strategies and overall profitability. Taxes due must always be clearly listed on invoices or receipts, this is a legal requirement.

VAT Rates in Germany (As of 2024)

Germany applies different VAT rates depending on the product or service:

The standard 19% rate applies to most goods and services. The reduced 7% rate is reserved for essential items like food, books, and newspapers.

Special VAT rules for the catering industry (As of 2024)

A temporary VAT relief on restaurant food was also introduced but ended on December 31, 2023. As of January 1, 2024, the following VAT rates apply:

-          Food consumed on-site: 19%,

-          Food sold for takeaway or delivery: 7%,

-          Beverages: 19%.

Important exceptions (Beverages):

-          Cow’s milk and drinks made mostly with milk (like latte macchiato) are considered staple foods and taxed at 7%, regardless of whether they are consumed in the café or taken to go,

-          If the same drink is made with plant-based milk (e.g., oat milk), it is taxed at 19%.