The value-added tax (VAT) in Germany will be reduced from 19% to 16% starting on July 1, 2020. For products with a reduced tax rate (e.g., e-books), the VAT will be 5% instead of 7%. This new regulation is initially limited until December 31, 2020, and was decided by the federal government as part of the economic stimulus package.
Attention
The new VAT reduction only applies to:
- Digital products purchased by buyers located in Germany
- Shipped products sent to Germany
- On-site services, seminars, and events held in Germany
For all other countries, the usual VAT rates apply. See also Calculating VAT for reseller Digistore24 GmbH.
Note
The switch to the new VAT rates will be done automatically at Digistore24 on July 1, 2020.
Listing of new tax rates for your products
From July 1, 2020, to December 31, 2020, the following VAT rates apply in Germany for your products:
| Product type | VAT in Germany |
| Download products | 16% |
| E-books | 5% |
| Gift vouchers | 16%
|
| Shipped products |
16% 5% for books
|
| Electronically provided remote services (e.g., coaching via Skype or phone) |
16% |
|
6% This only applies to services/events held on-site (not online seminars). |
FAQs about the new VAT reduction in Germany
Do I, as a vendor, need to do anything regarding the new VAT reduction?
No. Digistore24 has already updated the new VAT rates for you. The change will be done automatically from July 1, 2020, and is initially valid until December 31, 2020.
Where does the new VAT reduction apply?
The new VAT reduction only applies to:
- Digital products purchased by buyers located in Germany
- Shipped products sent to Germany
- On-site services, seminars, and events held in Germany
For all other countries, the usual VAT rates apply. For more information, see here.
Does the new VAT reduction affect my product price?
It is important to distinguish between gross and net prices.
Gross price
If you have chosen the "gross price (incl. VAT)" option in your payment plan, only the tax portion changes, not the final price for the customer. To edit your payment plan, proceed as described here.
Net price
If you have chosen the "net price (VAT will be added if applicable)" option in your payment plan, the final price changes with the new VAT regulation. Here, the final price decreases and the buyer pays less. To edit your payment plan, proceed as described here.
Does the percentage distribution of revenue to affiliate, vendor, joint venture, and Digistore24 change due to the new VAT reduction?
The percentage distribution of gross prices remains the same. However, with gross prices, the tax portion changes, thereby increasing the revenue for vendors, affiliates, or joint ventures. Instead of 19% VAT, only 16% VAT and for the reduced tax rate, 5% instead of 7% are deducted.
With net prices, the revenue remains unchanged. Examples and explanations for the distribution of gross revenue can be found here.
Calculate tax, margin, shares, and affiliate commissions using our tax and commission calculator.
How does the new VAT reduction affect my customers' installment payments?
The service date determines which VAT rate applies. The service date for installment payments is the end of the paid period. If this installment falls within the period from July 1, 2020, to December 31, 2020, the reduced tax rate will be applied.
Exception: For events that take place at a fixed time (e.g., seminars), the service date is the date of the event. For multi-day events, it is the last day.
Note: If you offer both a one-time payment and installment payments for your product, the service date is the end of the paid period – even if the customer chose a one-time payment. For more information, see here.
What VAT rate applies if I offer both a one-time payment and installment payment for a product?
For example, if you offer an annual coaching with both a one-time payment and installment payment, the law assumes that the full service provision occurs at the end of the longest payment plan – even if the customer chose a one-time payment. The service date is then the end of the paid period.
Example
You have a product with both a one-time payment and an installment payment with 5 monthly installments. The customer buys the product on October 1, 2020, with a one-time payment. Due to the stored installment payment plan, the service date, despite the one-time payment, is the end of the paid period. Therefore, 19% is charged even for the one-time payment.
What about subscription payments? Especially for customers who subscribed before July 1. How does the new VAT reduction affect them?
Subscription payments, such as access to online software or a membership area, or monthly coaching, are partial services provided monthly. Ongoing subscription payments are therefore automatically adjusted.
All payments received by June 30, 2020, will still be taxed at 19% or 7%.
Subscription payments from July 1, 2020, to December 31, 2020, will be taxed at the reduced rate of 16% or 5%.
I sell an online course as the main product with an e-book as an add-on. What VAT rate is charged?
Since these are two separate products, the VAT rate for each product is calculated individually. The purchase of both products takes place within one order, as is usual with add-ons.
See also Creating add-ons at Digistore24 and Selling additional products correctly.
My customers can already secure tickets for an event taking place in 2021. What VAT rate is charged if the purchase takes place between July 1, 2020, and December 31, 2020?
For events, the VAT rate is determined by the event date. The purchase date of the tickets has no impact.
If an event takes place in 2021, the event date is outside the period for which the VAT reduction applies. Therefore, the regular 19% is charged, even if the ticket purchase occurred between July 1, 2020, and December 31, 2020.
However, if both the event date and the purchase date fall within this period, 16% applies.
Attention
All information is provided without guarantee and subject to further review by our tax advisory service.