Key takeaways
- Hospitality VAT remains at 7% — Germany has extended the reduced VAT rate on restaurant and catering services until December 31, 2023, to support post-pandemic recovery.
- Gas supplies VAT cut to 7% — The lower VAT rate on natural gas applies until at least March 31, 2024, helping offset rising energy costs for consumers.
- Solar panels now 0% VAT — From January 1, 2023, the supply and installation of photovoltaic systems on private or public-benefit buildings are exempt from VAT to promote renewable energy.
Economic and environmental concerns have been the driving force for the reduction of some VAT in Germany in 2023. The changes this year are:
Hospitality VAT now 7%
In 2020, Germany introduced a €65 billion relief package to combat the negative economic effects of the global covid-19 pandemic. This included a temporary reduction in the German VAT charged for restaurant and catering services from 19% to 7%. The reduction was due to expire on December 31, 2022, but will now be extended to December 31, 2023.
Gas supplies VAT now 7%
Due to soaring gas prices and the introduction of a Gas Levy, the VAT in Germany on natural gas supplies has also been reduced from 19% to 7%. The VAT reduction came into effect on October 1, 2022, and will remain until at least March 31, 2024. The German Gas Levy will be in place throughout the same period, during which time consumers will have to pay an extra €0.02419 per kWh for natural gas. It’s hoped the VAT reduction will mitigate this.
Solar panels VAT now 0%
In an effort to reduce its reliance on fossil fuels and meet environmental targets, Germany has introduced a 0% VAT rate on the supply and installation of photovoltaic (PV) systems as of January 1, 2023. Photovoltaic (PV) systems (also known as solar panels) are designed to supply solar power. This German VAT zero-rate only applies to the PV systems that have been installed on private homes or on buildings where revenue is generated for the public good.
Frequently asked questions
What are the current VAT rates in Germany for 2023?
Germany has temporarily reduced several VAT rates to ease economic pressure. Hospitality services and gas supplies are taxed at 7%, while solar panel supply and installation benefit from a 0% VAT rate.
Why has Germany reduced VAT on hospitality, gas, and solar panels?
The VAT cuts support economic recovery and environmental goals. Lower rates help struggling businesses, reduce energy costs, and promote renewable energy adoption.
