Tax & Law
VAT (Value Added Tax)
Definition
VAT (Value Added Tax), known in German as Umsatzsteuer (USt) or Mehrwertsteuer (MwSt), is a consumption tax on supplies of goods and services. In Germany the standard rate is 19% and the reduced rate is 7%. Electronic invoices under EN 16931 must state the VAT amount (BT-110), tax rate (BT-152), and taxable base amount (BT-116) for each tax breakdown.
Background & context
VAT is an indirect tax on the consumption of goods and services. Economically it is borne by the final consumer; companies collect it as a pass-through item and remit it, but can deduct the input VAT charged to them (a net all-stage VAT with input tax deduction). In Germany the standard rate is 19% and a reduced rate of 7% applies (e.g. for food, books, local public transport). In the electronic invoice under EN 16931, VAT is not just a total amount but is broken down in a structured way per tax category: in Business Group BG-23 (VAT BREAKDOWN), each category states the taxable base (BT-116), the tax rate (BT-119) and the resulting tax amount (BT-117). The sum of these category amounts must exactly equal the total VAT amount (BT-110) — checked by rule BR-CO-13. The tax category itself (BT-151) determines whether it is standard rate (S), reduced, exempt (E), reverse charge (AE) or zero rate (Z).
In practice — a worked example
An invoice contains two lines: €1,000 at the standard rate (19%) and €200 at the reduced rate (7%). In the e-invoice this produces two tax breakdowns in BG-23: category S with a taxable base of €1,000, rate 19%, tax amount €190; and category S with a taxable base of €200, rate 7%, tax amount €14. The total VAT amount (BT-110) is €204. If one were to round over the grand total instead, a one-cent error could arise and rule BR-CO-13 would fail — which is why rounding must be done per category.
Common mistakes
- •Rounding over the grand total instead of per VAT category leads to cent discrepancies and thus to error BR-CO-13.
- •Wrong tax rate: 7% instead of 19% (or vice versa) makes the tax calculation inconsistent and the invoice fiscally vulnerable.
- •Mixing tax rates in a single breakdown: each rate needs its own line in BG-23.
Frequently asked questions
How is VAT represented in an e-invoice?
In a structured way per tax category in Business Group BG-23: with taxable base (BT-116), rate (BT-119) and tax amount (BT-117). The sum must equal the total amount BT-110.
What are the German tax rates?
The standard rate is 19% and the reduced rate is 7%. Certain supplies are exempt (category E) or subject to the reverse charge mechanism (category AE).
Why does my tax calculation fail?
The most common cause is incorrect rounding: EN 16931 requires rounding per tax category, not on the grand total. Check BT-116 × rate = BT-117 per category (rule BR-S-2/BR-CO-13).