Understanding VAT for Freelancers in Germany: When Do You Need to Charge It?

For most freelancers, VAT (Umsatzsteuer) passes straight through: you charge it to your clients and hand it on to the tax office (Finanzamt), minus the VAT you paid yourself. This guide explains when you have to charge VAT, how the Kleinunternehmerregelung works, and what applies to clients abroad.

Key points

• The standard rate is 19%, the reduced rate 7% (§ 12 UStG).
• Small businesses (Kleinunternehmer) don’t charge VAT. Conditions: at most 25,000 euros turnover last year and at most 100,000 euros this year (§ 19 UStG).
• If you charge VAT, you file VAT advance returns (Umsatzsteuer-Voranmeldungen): quarterly, or monthly if your VAT last year was over 9,000 euros (§ 18(2) UStG).
• The advance return reports net amounts, not gross turnover.
• The VAT ID (Umsatzsteuer-Identifikationsnummer, USt-IdNr) is issued by the Federal Central Tax Office on application, not by your Finanzamt.
• For services to businesses in other EU countries, the reverse charge usually applies.

What is VAT?

VAT is a tax on consumption. Businesses add it to their prices, deduct the VAT they paid to their own suppliers (the input tax, Vorsteuer), and pay the difference to the Finanzamt. Economically, the end customer bears it.

The Kleinunternehmerregelung

The Kleinunternehmerregelung exempts small businesses from VAT.

Conditions

You can use it if your total turnover:

• was at most 25,000 euros last year, and
• is at most 100,000 euros this year.

In the year you start, only one limit applies: at most 25,000 euros in the current year (BMF letter of 18.03.2025, section 19.1(3) UStAE).

If you exceed 100,000 euros during the year, the exemption ends immediately. The very sale that takes you over the limit is taxable in full.

Pros and cons

Pros:

• No VAT on your invoices
• No advance returns, and since 2025 usually no annual VAT return either
• For private clients, your price looks 19% cheaper

Cons:

• No input tax deduction: the VAT on your purchases stays with you
• No price advantage with business clients, because they get the VAT back anyway

When it makes sense

The scheme usually fits if:

• your clients are mostly private individuals
• you have few expenses with VAT
• you’re not planning big investments

If you mainly work for businesses or invest a lot, standard taxation is often better. Run the numbers for both before you decide. If you opt out voluntarily, you are bound for five years (§ 19(3) UStG).

When you have to charge VAT

Standard taxation applies:

• from 1 January, if your turnover last year exceeded 25,000 euros
• immediately, if your turnover this year exceeds 100,000 euros, starting with the sale that crosses the limit
• if you voluntarily opt out of the Kleinunternehmer scheme
• from the start, if you didn’t choose the scheme in your tax registration questionnaire

You don’t need to apply for it. Standard taxation applies by law. From then on you charge VAT and file advance returns.

Importing goods from outside the EU doesn’t change any of this. Customs collects import VAT, and it doesn’t end Kleinunternehmer status.

Steuernummer and VAT ID

• Your tax number (Steuernummer) comes from your Finanzamt. You file your income tax and VAT returns under it, including the advance returns.
• The VAT ID is issued by the Federal Central Tax Office (BZSt) on application (§ 27a UStG). You mainly need it for business with companies in other EU countries. Kleinunternehmer can get one too.

Your invoices must show one of the two: the Steuernummer or the VAT ID (§ 14(4) no. 2 UStG). For services to businesses in other EU countries you need the VAT ID.

VAT rates in Germany

Standard rate: 19%

Applies to most services, including:

• consulting, design, programming, writing and other services
• software and digital products
• drinks, including in restaurants

Reduced rate: 7%

Applies among others to:

• books and newspapers, including e-books
• most food
• food served in restaurants since 1 January 2026 (§ 12(2) no. 15 UStG). Drinks stay at 19%.
• local public transport
• hotel stays

Tax-exempt supplies with input tax deduction

Germany has no general “zero rate”. Instead, certain supplies are tax-exempt, and you still keep the right to deduct input tax (§ 4 no. 1 UStG):

• exports, meaning goods sold to customers outside the EU
• intra-community supplies, meaning goods sold to businesses in other EU countries, with their VAT ID

VAT on invoices

As a Kleinunternehmer

Your invoice shows no VAT and includes a note about the exemption.

Example:

Service: Website design
Amount: 1,000.00 EUR
No VAT charged under § 19 UStG (Kleinunternehmer).
Total: 1,000.00 EUR

Under standard taxation

Among other things, your invoices must show:

• your Steuernummer or VAT ID
• the net amount
• the VAT rate (19% or 7%)
• the VAT amount
• the total

Example:

Service: Website design
Net amount: 1,000.00 EUR
VAT (19%): 190.00 EUR
Total: 1,190.00 EUR

The full list of mandatory details is in our guide to professional invoices.

VAT advance returns

How often

In the year you start and the year after, the rule is monthly filing. For 2021 to 2026 that rule is suspended: the expected VAT for the current year decides instead (§ 18(2) UStG).

Deadlines

The advance return is due on the 10th day after the period ends, and so is the payment.

If the 10th falls on a weekend or public holiday, the deadline moves to the next working day. A permanent filing extension (Dauerfristverlängerung) gives you one extra month. Our guide to filing the VAT advance return explains how.

What you report

• the net amounts of your sales, split by VAT rate (the taxable bases)
• tax-exempt sales and reverse-charge sales
• your deductible input tax
• which gives the amount to pay or to be refunded

For domestic sales, ELSTER works out the VAT from the net amounts.

After the year ends, you also file an annual VAT return (Umsatzsteuer-Jahreserklärung).

Input tax

Input tax is the VAT other businesses charge you. Under standard taxation, you deduct it from your own VAT.

You can deduct input tax on almost all business costs: equipment, software, advice, travel, advertising.

Conditions (§ 15 UStG):

• a proper invoice with the VAT shown separately
• the purchase is for your business
• the service has been provided, or for down payments, the payment has been made

Clients abroad

Businesses in other EU countries

For services to a business in another EU country, the place of supply is where the client is (§ 3a(2) UStG). The client owes the VAT in their country (reverse charge).

For you, that means:

• an invoice without German VAT
• your VAT ID and the client’s VAT ID on the invoice
• the note “Steuerschuldnerschaft des Leistungsempfängers” (reverse charge, § 14a(1) UStG)
• reporting the sales in your advance return and in the EC Sales List (Zusammenfassende Meldung)

Check the client’s VAT ID first, for example with the BZSt’s confirmation service.

Registering abroad is the exception, for example for digital services to private customers in other EU countries. The OSS procedure exists for that.

Clients outside the EU

Services to businesses outside the EU are not taxable in Germany (§ 3a(2) UStG). You charge no VAT, write “nicht im Inland steuerbar” (not taxable in Germany) on the invoice, and still report the sale in your advance return.

For private clients outside the EU, it depends on the kind of service. It’s worth going through your specific case with a tax adviser.

Common mistakes

Crossing the limit without noticing. Keep an eye on your turnover, especially towards year end.

Entering gross amounts in the advance return. ELSTER calculates the tax from the figure you enter. A gross amount then gets taxed a second time.

Missing deadlines. For late filing, the Finanzamt can set a late-filing surcharge; late payment triggers late-payment surcharges.

Not keeping records. Keep invoices, outgoing and incoming, for eight years (§ 14b UStG, § 147 AO).

Reverse-charge invoices with German VAT. You then owe the VAT you showed anyway.

Tips

Set VAT aside straight away. The VAT in your incoming payments isn’t yours. At 19%, it’s a little over a sixth of every gross payment (19/119).

A tax adviser for cross-border cases. Place of supply, reverse charge and OSS depend on the details. A tax adviser should look at what exactly you provide, to whom and where.

How Solobooks helps

Solobooks calculates the VAT on your invoices once you choose the rate for each line, and records the input tax on your expenses. From these transactions, Solobooks builds your VAT advance returns. You check the figures and submit the return directly to ELSTER. When a deadline gets close, Solobooks reminds you.

FAQ

When do I have to start charging VAT? From 1 January if your turnover last year was over 25,000 euros, or immediately once your turnover this year exceeds 100,000 euros.

Do I have to apply for standard taxation? No. It applies by law as soon as you no longer meet the Kleinunternehmer conditions.

Who issues the VAT ID? The Federal Central Tax Office (BZSt), on application.

Does my invoice need my VAT ID? Your Steuernummer or your VAT ID is enough. For services to businesses in other EU countries, you need the VAT ID.

What VAT rate applies in restaurants? Since 2026, 7% for food and 19% for drinks.

How often do I file the advance return? Quarterly, or monthly if your VAT last year was over 9,000 euros.

Need help?

If you have questions about VAT:

• Email us at support@solobooks.de
• Chat with us in the app

Sources

• § 19 UStG – Kleinunternehmer
• § 12 UStG – Steuersätze
• § 18 UStG – Besteuerungsverfahren (Voranmeldung)
• § 3a UStG – Ort der sonstigen Leistung
• § 14 UStG – Ausstellung von Rechnungen
• § 14a UStG – Zusätzliche Pflichten bei der Ausstellung von Rechnungen
• § 27a UStG – Umsatzsteuer-Identifikationsnummer
• BMF letter of 18.03.2025 – Kleinunternehmer (§ 19, § 19a UStG)

Last checked: 30 October 2026. This article is general information, not tax advice for your individual case. Legislation and official guidance change — the current version of each source prevails.

Last updated: October 30, 2026