Does Your US SaaS Need to Charge VAT in Germany?

Short answer: it depends on who your German customer is.

German consumers: yes, from your first euro. You charge 19% German VAT and pay it through one EU registration, the non-Union One-Stop Shop (OSS). There’s no threshold for SaaS companies based outside the EU.
German businesses: no. Business sales are reverse-charged. You invoice without VAT, and the customer accounts for it.

So a B2B-only SaaS with a valid VAT number on every German account has nothing to register. Most US SaaS companies sell to both, which means a non-Union OSS registration. This guide covers what that involves, with real numbers. Shipping physical products instead? See Do US Sellers Need to Charge VAT in Germany?

German VAT for SaaS: who pays what

Who’s buying	Do you charge German VAT?	What you file
German consumer (individual, personal use)	Yes, 19%	A quarterly non-Union OSS return
German business with a valid VAT number	No, reverse charge	Nothing in Germany. Keep the VAT number on file
German business without a VAT number	19%, unless you have solid evidence it’s a business	Non-Union OSS return, if you charged VAT
Anyone, through a Merchant of Record (Paddle, Lemon Squeezy, App Store)	No, the MoR does	Nothing

Why US SaaS owes German VAT from the first sale

EU VAT on digital services is charged where the customer is, not where you are. Since 2015, a German consumer buying software from anywhere in the world pays German VAT on it.

US founders often expect something like economic nexus, where a state only taxes you once you pass $100,000 in sales. The EU version doesn’t exist for non-EU sellers:

The €10,000 threshold isn’t yours. It only applies to SaaS companies established in the EU.
The Kleinunternehmer exemption isn’t yours. Germany’s €25,000 small business exemption only applies to businesses established in the EU.
The tax treaty doesn’t help. The US–Germany treaty covers income tax, not VAT.

A Delaware C-corp, a solo founder’s LLC and a bootstrapped indie hacker all owe German VAT on their first €10 subscription sold to a German consumer.

Is SaaS an “electronically supplied service”?

Yes. EU law defines electronically supplied services as services delivered over the internet that are essentially automated, with minimal human involvement. That covers:

SaaS and cloud software, including AI tools and APIs sold on a subscription or usage basis
Software downloads, apps, plugins and themes
Online courses that are pre-recorded or automated
Streaming, memberships and digital content

Services that are mainly human work don’t count, such as consulting, custom development, live 1:1 training or implementation projects. Those follow different rules, and sales of them to German consumers by a US business are often outside EU VAT altogether. If you bundle onboarding with a subscription, the bundle is usually taxed as SaaS.

German VAT rates for digital products

Product	German VAT rate
SaaS, cloud software, APIs	19%
Software downloads, apps, plugins	19%
Streaming, memberships, digital content	19%
Automated online courses	19%
E-books, digital newspapers and magazines	7%

How to register: the non-Union OSS

The non-Union OSS is the EU’s single registration for digital services sold to EU consumers by businesses based outside the EU. One registration, one quarterly return and one payment cover all 27 EU countries, with Germany’s 19% alongside France’s 20%, Ireland’s 23% and the rest.

Choose any EU country to register in. If you pick Germany, you register with the Federal Central Tax Office (BZSt) through its online portal, and everything is in German. Many US companies choose Ireland, where the process is in English. Your choice doesn’t change the rates you charge or where the VAT ends up.
Register by the 10th of the month after your first EU consumer sale. Do that and your first sale is covered by the scheme from day one. Miss it and the scheme only starts from the next quarter.
File every quarter, by the end of the month after the quarter ends: 30 April, 31 July, 31 October and 31 January. File even when you made no EU sales (a nil return).
Report and pay in euros. If you charge in dollars, convert using the European Central Bank rate for the last day of the quarter.
Keep records for 10 years, including the evidence of where each customer was.

The non-Union OSS only collects VAT. You can’t reclaim German VAT you paid on business expenses through it. That goes through a separate refund claim to the BZSt (Germany grants refunds to US businesses), due by 30 June of the following year. See Reclaiming EU VAT on expenses.

The non-Union OSS guide covers the scheme for all 27 countries.

Proving where your customer is

For every consumer sale you need two pieces of evidence that agree on the customer’s country. Common sources:

Billing address
IP address at purchase
The country of the card or bank (from the card’s BIN)
The country code of the customer’s phone number

A customer with a Berlin billing address paying with a German card is a German customer. When evidence conflicts, for example a US billing address and a German IP address, you need a third piece to settle it. Payment processors and tax tools collect this automatically. Make sure yours keeps it for the 10 years.

Selling to German businesses: the reverse charge

When your customer is a German business, the sale is taxed in Germany but the customer pays the VAT through the reverse charge (Steuerschuldnerschaft des Leistungsempfängers). You don’t charge VAT, and you don’t register in Germany for these sales.

To apply it correctly:

Ask for the customer’s German VAT number (USt-IdNr) at checkout. German numbers are “DE” followed by 9 digits.
Validate it in the EU’s VIES database, or with our free EU VAT number checker, and keep the result.
Invoice without VAT and add a note such as: “Reverse charge: VAT to be accounted for by the recipient. Steuerschuldnerschaft des Leistungsempfängers.”

Some genuine German businesses don’t have a VAT number, usually small businesses using the Kleinunternehmer exemption. You can treat them as businesses if you have other solid evidence, but the safe default without a VAT number is to charge 19%.

Pricing for German customers

Show prices including VAT

Germany’s Price Indication Ordinance (Preisangabenverordnung, PAngV) requires prices shown to consumers to include VAT. “€29/month + tax” is not compliant on a page aimed at German consumers. Show “€29/month incl. VAT” or localize the price to include it. Business-facing pricing can be shown net.

Absorb the VAT or add it on top?

Say your plan costs €29 a month.

	Keep the €29 price	Keep €29 for you
Customer pays	€29.00	€34.51
German VAT (19%)	€4.63	€5.51
You keep	€24.37	€29.00

Most US SaaS companies keep a single round price across the EU and absorb the difference, which means slightly different margins in each country. Others set a price per country so the margin stays the same.

Worked example: a quarter of German sales

A US analytics SaaS has two kinds of German customer:

300 consumers (freelancers buying for personal use, no VAT number) on a €20/month plan, VAT included
40 businesses with validated German VAT numbers on a €200/month plan

For Q1 (January to March):

	Consumers	Businesses
Revenue	300 × €20 × 3 = €18,000.00	40 × €200 × 3 = €24,000.00
German VAT	€18,000 × 19 ÷ 119 = €2,873.95	€0, reverse charge
You keep	€15,126.05	€24,000.00
Reported on	Non-Union OSS return, due 30 April	Nothing to file in Germany

The €2,873.95 goes on the same OSS return as your sales to consumers in France, the Netherlands and every other EU country, and you make one payment for the total.

Where your payment setup fits in

You use a Merchant of Record (Paddle, Lemon Squeezy, Polar, Stripe Managed Payments) or sell through an app store (Apple, Google Play). The MoR or app store is legally the seller. It charges German VAT, files and pays it. You have nothing to register, but you pay for it through higher fees.

You use Stripe, Braintree or another payment processor directly. You are the seller, so the registration and returns are yours. Stripe Tax can calculate and collect the right VAT at checkout, but it doesn’t register you for the non-Union OSS, and filing the quarterly return is still your job unless you add a filing service. See GoodVat vs Stripe Tax for where that line falls.

Not sure which setup makes sense? SaaS payments: Merchant of Record vs Stripe + GoodVat compares the real all-in cost at different revenue levels.

Germany-specific things US SaaS companies ask about

German withholding tax on software

Germany can require customers to withhold tax on royalties paid abroad (section 50a of the German Income Tax Act). German tax authority guidance says standard SaaS and software used as intended is not caught. Licensing deals that give the customer rights to copy, modify or redistribute your software can be. Even then, the US–Germany tax treaty reduces the rate to 0% if you hold an exemption certificate (Freistellungsbescheinigung) from the BZSt. If a large German customer brings this up, it’s an income tax question, not a VAT one.

German e-invoicing

Germany is phasing in mandatory B2B e-invoices (XRechnung or ZUGFeRD) between 2025 and 2028. The rules apply to sales between businesses established in Germany, so a US SaaS without a German office isn’t required to issue them. Some German enterprise customers will still ask for them. Details in E-invoicing in Germany.

German tax authorities can see your sales

Since 2024, EU payment providers report cross-border payment data to EU tax authorities through the CESOP system. A US SaaS taking regular card payments from German customers shows up in that data whether or not it’s registered.

What if you’ve been selling without charging VAT?

It’s common. Many US SaaS companies find out about EU VAT at their first enterprise security review or when an investor’s due diligence asks for it. The fix:

Work out what you owe. List your EU consumer sales by country and quarter. Business sales with valid VAT numbers don’t count.
Register for the non-Union OSS now, so new sales are handled correctly.
Settle the past periods, usually through voluntary disclosure. Coming forward before a tax authority contacts you keeps penalties low.

Late EU VAT registration explains how to calculate back-VAT and approach each country.

How GoodVat handles German VAT for your SaaS

GoodVat Global Tax Compliance connects to Stripe and handles German VAT, and the rest of your EU and US obligations, from registration to filing:

Registers you for the non-Union OSS, and anywhere else you need to be, such as the UK or US states where your SaaS is taxable
Calculates VAT on every Stripe charge: 19% for German consumers and reverse charge for German businesses, with each VAT number checked against VIES
Keeps the location evidence for every sale, ready for an audit
Files your quarterly OSS return and sends compliant invoices
Flat pricing, not a percentage of your revenue

FAQ

Is there a VAT threshold for US SaaS companies selling to Germany?

No. A SaaS company based outside the EU must charge German VAT from its first sale to a German consumer. The €10,000 EU threshold only applies to businesses established in the EU, and Germany’s small business exemption only applies to businesses established in the EU.

Do I charge VAT to German business customers?

No. If your German customer is a business, the reverse charge applies: you invoice without VAT and the customer accounts for the 19% German VAT on its own return. Collect and validate the customer’s German VAT number (USt-IdNr) before you zero-rate the sale.

Do I need to register for VAT in Germany specifically?

No. A single non-Union OSS registration in any EU country covers German VAT and VAT for the other 26 EU countries. You file one quarterly return and make one payment. You can choose Germany (through the Federal Central Tax Office, BZSt) or another country such as Ireland.

What VAT rate applies to SaaS in Germany?

19%, the standard rate. SaaS, software downloads, apps, streaming and automated online courses are all taxed at 19%. E-books and digital newspapers and magazines get the reduced 7% rate.

Does Stripe Tax handle German VAT for my SaaS?

Stripe Tax calculates and collects German VAT at checkout, but you still need your own non-Union OSS registration and you still have to file the quarterly return, either yourself or through a filing service such as GoodVat.

Do I need to charge German VAT if I sell through Paddle, Lemon Squeezy or the App Store?

No. Paddle, Lemon Squeezy, Polar, Stripe Managed Payments, Apple’s App Store and Google Play act as the Merchant of Record or deemed supplier. They charge and pay the VAT, and you receive a net payout.

Do German customers withhold tax on SaaS payments to US companies?

Generally not for standard SaaS subscriptions used as intended. German withholding tax on royalties (section 50a of the Income Tax Act) can apply to licensing deals that grant rights to copy, modify or distribute software. The US–Germany tax treaty reduces it to 0% with an exemption certificate from the BZSt.

Do US sellers need to charge VAT in Germany?: the same question for physical products
Non-Union OSS for digital services: the registration that covers all 27 EU countries
SaaS payments: Merchant of Record vs Stripe + GoodVat: what each setup really costs
Stripe Tax for SaaS and digital goods: the US state sales tax side of selling SaaS
Selling to EU businesses: reverse charge and VAT number checks in detail
Digital goods VAT risks: the mistakes digital sellers make most often
International VAT guides for US sellers: every guide in this series