Germany V.A.T. and Other Taxes

  • The standard value added tax rate in Germany is 19%.
  • There is a reduced rate of 7% that relates mainly to food and agricultural products.
  • Value added tax is imposed on assets and services in Germany as well as on imports into Germany.
  • Overseas exports are exempt from value added tax.
  • Value added tax reports must be submitted monthly or quarterly, depending on the annual turnover.
  • There are special provisions for small businesses.
  • The threshold for V.A.T. registration is a turnover exceeding EUR 22,000 in the previous year.

Germany Inheritance and Gifts Tax:

  • A tax applies in Germany to both inheritances and gifts and the application of the taxation principles is similar in both cases.
  • When either the person making the gift / the testator or the recipient of the gift / the heir is a German resident, the tax applies also to assets that are overseas.
  • When neither the person making the gift / the testator or the recipient of the gift / the heir is a German resident, the tax applies only to assets that are located in Germany.
  • When tax is imposed in a foreign country, the tax paid overseas will be deducted from the tax payable in Germany. For these purposes a Double Taxation Prevention Treaty has been signed with a number of countries, among them, the United States of America, Switzerland, Austria and others.
  • As a general rule, recipients of gifts / inheritances are divided into three groups.
    Group 1 - a spouse, children.
    Group 2 - parents and grandchildren.
    Group 3 - all others.
  • The tax rates vary according to the above groups and also depend on the value of the asset.
    The tax payable fluctuates between 7% and 50%.
  • There are certain exemptions that depend on the degree of family kinship.

Germany Real Estate Transfer Tax:

  • The tax is imposed on real estate that is located in Germany.
  • The taxes are transferred to the local authority in which the property is located.
  • The tax is also imposed when buying at least 90% shares of a company owning real estate.
  • The rate of tax is 3.5%-6.5%.

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