Understanding VAT (Umsatzsteuer) · 2.4
19%, 7% or Tax-Exempt: Which Tax Rate Applies?
Short answer
The standard rate of 19% applies to most digital services. Reduced rates and tax exemptions are exceptions individually enumerated in the law. When in doubt, 19% applies.
Key points
| Rate | Examples |
|---|---|
| 19% standard rate | Consulting, agency services, software, SaaS, advertising, most online courses |
| 7% reduced | Groceries, books and e-books, restaurant meals |
| 0% | Certain photovoltaic systems |
| Tax-exempt | Medical treatments, insurance, residential leasing, certain educational services |
Tax-exempt also means: no input tax deduction (Vorsteuerabzug). Tax-exempt, small business operator (Kleinunternehmer), and "not taxable" are three distinct cases, each requiring its own notice on the invoice. Online courses are only tax-exempt in exceptional cases, such as with an official certification as an educational institution. Services to customers abroad follow their own specific rules.
Figures & thresholds (as of November 2026)
- Gastronomy: food permanently 7% since 01.01.2026, beverages continue at 19%
- The list of reduced-rate goods is found in Annex 2 of the UStG
Legal basis
Continue
- Next video: What is the small business regulation (Kleinunternehmerregelung)?
- Related: Kategorie EU, Ausland & Reverse Charge
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