Everything you need to know about the different tax rates for incoming invoices


Different tax rates in Germany

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Incoming invoices are an important part of a company's accounting, as they contain information about the goods and services purchased and the associated taxes. Knowing the different tax rates on incoming invoices is essential for accountants in Germany to ensure that they make correct entries and do not run any tax risks. This article explains the different tax rates on incoming invoices and their impact on accounting.

Value Added Tax

VAT is an indirect tax on the consumption of goods and services. In Germany, the general VAT rate is currently 19%. This rate applies to most goods and services sold or provided in Germany. However, there are reduced tax rates and tax exemptions for certain goods and services.

Reduced tax rate

Germany has a reduced tax rate of 7% for certain goods and services, e.g. books, food, pharmaceuticals and newspapers. Accountants must ensure that the correct tax rate is applied when posting incoming invoices that include the reduced tax rate.

Tax-free invoices

There are also invoices that are completely tax exempt. This mainly concerns export deliveries and intra-Community deliveries, where the tax liability is transferred to the recipient of the goods or services. In these cases, accountants must ensure that the appropriate evidence is provided to confirm the tax exemption.

Reverse charge procedure

In some cases, the recipient of the goods or services must pay the VAT to the tax office themselves instead of the supplier doing so. This so-called reverse charge procedure comes into play when goods or services are purchased from abroad or certain services are provided in Germany. Accountants must ensure that they apply the reverse charge rules correctly so as not to run any tax risks.

Special regulations for small entrepreneurs

Small business owners with annual sales of less than 22,000 euros are exempt from VAT. However, accountants must ensure that they correctly apply the small business rule to ensure proper accounting.


In conclusion, the correct treatment of tax rates on incoming invoices is very important to avoid tax consequences and possible penalties. It is important to understand the different tax rates and show them correctly on the invoices. Good accounting software with automated features and careful review can be helpful in correctly handling tax rates on purchase invoices. Accountants should also attend regular training and education to stay current and avoid mistakes. Striving to correctly handle tax rates on incoming invoices can help ensure the company's financial stability and avoid negative impacts on the business.

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