UmsatzsteuerVAT

Umsatzsteuer, commonly abbreviated USt, is the German term for value-added tax (VAT). VAT is a broad-based consumption tax on most goods and services charged at each stage of production and distribution. In general, the tax is paid by the final consumer, while businesses act as collectors and remitters to the tax authority.

Mechanism: a business charges output tax on its sales and may deduct the input tax paid on purchases. The net amount is paid to the tax authority through periodic VAT returns. If input tax exceeds output tax, a refund or credit is possible. Special schemes apply to certain transactions.

Rates and exemptions vary by country. Germany uses a standard rate and a reduced rate for selected goods and services, with exemptions or zero ratings for others. The exact rates and rules depend on policy and may change over time.

Cross-border and EU rules: for intra-EU trade, place-of-supply and reverse-charge rules determine VAT liability. In B2B transactions, VAT is commonly accounted for by the buyer. The EU's One-Stop Shop (OSS) scheme simplifies reporting for cross-border online sales and services.

Small businesses in Germany may apply the Kleinunternehmerregelung, which can exempt eligible entrepreneurs from charging VAT. Otherwise, businesses register for VAT, file periodic returns, issue compliant invoices, and maintain records to support input and output tax deductions.