When should I charge VAT for my freelance services in Germany, and when not?

• If you opt for or qualify under the Kleinunternehmerregelung (small-business scheme), you do not charge VAT but also cannot deduct input VAT. Since January 2025, the thresholds are: €25,000 in the previous calendar year and €100,000 in the current year (raised from the old €22,000/€50,000 limits by the Annual Tax Act 2024).
• If you are VAT-registered, then:
  • EU B2B services typically use reverse charge (no German VAT on the invoice).
  • Non-EU B2B: generally no German VAT.
  • B2C: often German VAT unless a specific rule applies (e.g., digital services via OSS, certain event/real-estate services).

1. Check your scheme

   • Staying under the Kleinunternehmer threshold (€25,000 prior-year, €100,000 current-year as of 2025)? Then invoice without VAT and add the mandatory note that you’re applying the small-business regulation.
   • If you opt out or exceed thresholds, register for VAT and file returns.

2. Identify customer & service

   • B2B EU with valid VAT ID → reverse charge.
   • B2B non-EU → generally out of German VAT scope.
   • B2C → usually German VAT, unless special rules (digital services via OSS, real-estate services at property location, some cultural/event services).

3. Invoice correctly

   • Show your VAT ID (if registered), the client’s VAT ID for reverse charge, and the proper legal note.
   • For Kleinunternehmer, add a note like: “VAT not charged pursuant to Kleinunternehmerregelung.”

• You design a website for a German private client → charge German VAT unless Kleinunternehmer.
• You consult for a Dutch company with a valid VAT ID → reverse charge; no German VAT.
• You sell a downloadable course to EU consumers → register for OSS and charge each buyer’s local rate.

• Forgetting to opt out of Kleinunternehmer when input VAT is high.
• Using reverse charge on B2C invoices.
• Not verifying EU VAT IDs or keeping proof.
• Missing the OSS setup for digital B2C sales.

1. Decide whether to use Kleinunternehmer or register for VAT.
2. Set up invoice templates for each scenario (DE B2C, EU B2B reverse charge, non-EU B2B).
3. For digital B2C, enable OSS in your checkout.
4. Store VIES screenshots and location evidence for five+ years.

📌 Related: VAT for international freelance clients and Business expenses you can deduct.

⚠️ IMPORTANT LEGAL DISCLAIMER:

This content is for educational and informational purposes only and does not constitute financial, tax, legal, or investment advice. You should not rely on this information as a substitute for, nor does it replace, professional financial or tax advice. Always consult with qualified professionals (tax advisors, financial planners, lawyers) before making any financial decisions or taking any actions based on this information.

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Disclaimer: This is general information and may differ for individual cases. Learn more about financial planning with Financemate in a discovery call. Confirm current limits with your tax advisor or Finanzamt.