Germany is one of the largest economies in Europe, and its tax system is crucial to the operation of the country’s finances. Among them, German Value Added Tax (VAT) is an important form of tax that applies to almost all goods and services. This article will introduce the calculation method of German VAT tax rate and provide you with some relevant information.
1. Standard Rate.
Germany’s standard VAT rate is 19%. This means that a 19% tax will be added to the sales price of most goods and services. Taking an item worth 100 euros as an example, its actual selling price will be 100 euros plus a tax of 19 euros, which means a total of 119 euros.
2. Reduced Rates.
In addition to the standard tax rate, Germany also has reduced tax rates that apply to certain goods and services. Here are some common reduced tax rate categories and their corresponding tax rates:
Food and agricultural products: Some food and agricultural products are eligible for a reduced tax rate of 7%. This includes meat, vegetables, fruits, dairy products, etc. Therefore, with a purchase price of 10 euros, the actual selling price will be 10 euros plus 7% tax, or a total of 10.70 euros.
Hotel accommodation: Hotel accommodation services are subject to a reduced tax rate of 7%. So, for example, for a hotel room that costs 100 euros a night, the actual selling price will be 100 euros plus 7% tax, or a total of 107 euros.
Publications: Books, newspapers, magazines and other publications are subject to reduced tax rates, with a tax rate of 7%. Taking a book priced at 20 euros as an example, the actual selling price will be 20 euros plus 7% tax, or a total of 21.40 euros.
It should be noted that the reduced tax rate only applies to goods and services that meet certain conditions. Standard tax rates still apply to other goods and services.
3. Calculate VAT tax.
The method of calculating VAT tax is very simple. Using the standard tax rate as an example, let’s say you purchase an item for €100. First, multiply the selling price by the percentage of the standard tax rate (19%), i.e. €100 × 0.19 = €19. In this way, you get the VAT amount for the product.
4. VAT Refund.
Certain non-residents visiting Germany may be eligible for a VAT refund. VAT tax refund means that the VAT tax paid when purchasing goods can be returned to the buyer through certain procedures. This policy aims to encourage tourism and consumption and attract international tourists.
To apply for a VAT refund, you need to meet the following conditions:
Non-resident status: You must be a resident of a country or region other than Germany.
Minimum purchase amount: Normally, you must make a certain amount of purchases in the same store (usually more than 25 euros) to be eligible to apply for a tax refund.
Exit time limit: You must leave the EU within three months of making your purchase.
When applying for a VAT refund, you need to follow the following steps:
Request a tax refund form when shopping: When shopping, ask for a tax refund form (VAT refund form) from the store. Make sure to fill in the correct personal information and purchase amount, and stamp the store’s stamp on the tax refund form.
Customs stamp: Before leaving the EU, you need to take your shopping items and tax refund form to the customs for tax refund procedures. When going through exit procedures, customs officers will inspect your shopping items and stamp the tax refund form with a customs stamp.
Tax refund method selection: You can choose a cash refund or have the tax refund refunded to your credit card or bank account.
It should be noted that each store may have different tax refund policies and procedures, so it is best to consult the store staff or refer to their tax refund guide before shopping.
In addition, there are some specialized tax refund service providers that can help you handle VAT refund procedures, but they will charge a certain fee.
Summary:
The calculation method of German VAT tax rate is relatively simple. The standard tax rate is 19%. The reduced tax rate applies to specific goods and services such as food, hotel accommodation and publications. The tax rate is 7%. To apply for a VAT refund, non-residents need to meet the conditions and follow certain procedures to handle the tax refund procedures. I hope this article can help you better understand the calculation method and related information of German VAT tax rate.