VAT 7 or 19 %: Which Rate Applies When?

Whether your invoice must show 7 % or 19 % VAT is not a matter of gut feeling but of the German VAT Act (UStG). The wrong rate quickly causes trouble with the tax office: if you charge too little, you owe the difference; if you charge too much, you owe the excess anyway (§ 14c UStG). This overview shows you clearly what applies when.

The basic rule: 19 % is the default

The standard rate is 19 % (§ 12 para. 1 UStG). It applies to all supplies and services for which the law provides no exception. So you do not need to justify why 19 % applies – you only need to check whether one of the 7 % exceptions is met.

The reduced rate of 7 % (§ 12 para. 2 UStG) is exhaustively regulated. The exact list of eligible goods is set out in Annex 2 to the UStG. In addition, there are individual tax-free transactions at 0 % (e.g. certain medical services, residential rentals, intra-community supplies). Misclassifying a transaction risks not only back-payments but also corrections to your business partner's input-tax deduction.

Comparison table: 7 % or 19 %?

Note: Long-distance rail passenger transport (over 50 km) has been permanently taxed at 7 % since 2020. Special rules apply to flights and international routes.

A concrete worked example

A café sells a coffee and a filled roll.

Option 1 – takeaway (to go):

• Roll (cold dish, takeaway): 7 %
• Coffee (beverage): 19 %

Option 2 – consumed on site:

• Roll and coffee count as a restaurant service: both 19 %

Take the roll at €3.50 gross as takeaway:

• Net = €3.50 × 100 / 107 = €3.27
• VAT included (7 %) = €3.50 − €3.27 = €0.23

The same roll eaten in at €3.50 gross:

• Net = €3.50 × 100 / 119 = €2.94
• VAT included (19 %) = €3.50 − €2.94 = €0.56

As you can see, the same item can be taxed differently depending on the circumstances. You can calculate the VAT included in seconds with our VAT calculator – just enter the gross amount and choose the rate. The underlying formula is: Net = Gross × 100 / (100 + rate), and VAT = Gross − Net.

Common edge cases and pitfalls

Restaurant vs. delivery. The temporary reduction to 7 % for restaurant meals ended on 31.12.2023. Since 01.01.2024 the full rate of 19 % again applies to eating in. If you deliver cold dishes or sell them as takeaway, the 7 % rate still applies to the food itself – beverages are usually 19 %.

Hotel stay with breakfast. The accommodation itself enjoys the reduced 7 % rate, but breakfast and other add-on services are taxed at 19 %. Many hotels therefore show breakfast separately. A flat-rate "wellness share" is often estimated at 19 %. Example: a room at €100.00 net costs €107.00 gross with 7 % VAT; a breakfast at €15.00 net comes to €17.85 gross with 19 %.

E-book vs. app. Since December 2019 e-books, digital newspapers and magazines have qualified for the reduced 7 % rate because they were put on par with printed works. Pure software, apps, streaming subscriptions and online courses, however, stay at 19 %. What matters is the content character: a digital book remains a book, while an interactive learning program is a software service.

Beverages. Almost all beverages are subject to 19 % – including juices and mineral water. An important exception is tap water (supplied by waterworks) and milk, which are taxed at 7 %.

Mixed supplies. If you sell a bundle of 7 % and 19 % components (e.g. a gift basket with groceries and wine), you must split the price and show both rates separately. Under § 14 para. 4 UStG an invoice must state the net amount broken down by tax rate. Example: groceries at €20.00 net (+€1.40 VAT) and wine at €15.00 net (+€2.85 VAT) come to €39.25 gross in total – but with two separately stated tax rates.

What does this mean for your invoice?

A complete invoice must, under § 14 UStG, state the applicable tax rate and the tax amount. The mandatory fields also include the name and address of supplier and recipient, the tax number or VAT ID, the issue date, a sequential unique invoice number, the quantity and type of supply, and the time of supply. With multiple rates, list the items separately:

• Book (7 %): €18.69 net + €1.31 VAT = €20.00
• USB stick (19 %): €8.40 net + €1.60 VAT = €10.00
• Total: €27.09 net + €2.91 VAT = €30.00

For invoices up to €250 gross, simplified fields apply as a small-amount invoice under § 33 UStDV – here it is enough to state the gross amount and the tax rate without separating the net amount. So you don't miscalculate, our invoice generator handles the breakdown automatically: you choose the rate per item, the tool correctly sums net, VAT and gross – and creates a §-14-compliant PDF invoice free of charge and without sign-up.

E-invoicing: correct rates matter even more

Since 01.01.2025 every domestic business must be able to receive structured B2B e-invoices. Transition periods apply to issuing: until 31.12.2026 paper and PDF invoices are still allowed with the recipient's consent; for businesses with prior-year turnover up to €800,000 this is extended until 31.12.2027. From 01.01.2028 structured e-invoices become fully mandatory in B2B. The common formats follow the EN 16931 standard – XRechnung (pure XML) and ZUGFeRD (hybrid PDF/A-3 with embedded XML). Precisely because these formats are read by machines, a wrong tax rate is spotted faster: the correct rate per line item is no longer just a formality but a technical prerequisite for smooth processing on the recipient's side.

Small businesses: neither 7 % nor 19 %

If you use the small business scheme under § 19 UStG (prior-year turnover ≤ €25,000 and current year ≤ €100,000), you show no VAT at all – neither 7 % nor 19 %. Instead, the invoice must carry the note: "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet." (No VAT is charged under § 19 UStG.) However, an input-tax deduction is then not possible. Small businesses must be able to receive e-invoices, but for their own tax-free sales they are exempt from the issuing obligation and may issue e-invoices voluntarily.

GoBD: storing invoices correctly

Regardless of the tax rate, invoices must be stored unalterably under the GoBD rules. The retention period for invoices has been 8 years since 2025 (reduced from 10). A cleanly prepared invoice with correctly stated rates therefore saves you trouble not only in day-to-day business but also during a later tax audit.

When in doubt: look it up rather than guess

The classification is not always intuitive – lobster is 19 %, carp is 7 %; the e-book is 7 %, the software is 19 %. The decisive source is Annex 2 to the UStG. For recurring uncertainty, a quick word with your tax advisor or a binding ruling from the tax office is worthwhile. Note too: a pro-forma invoice is not an invoice under the UStG and does not entitle the recipient to an input-tax deduction – it only serves purposes such as advance-payment requests, customs or quotes. For the invoice itself – gross, net and tax amount per rate – it's best to use our VAT calculator directly.