Calculating VAT in 2026: The Complete Guide
VAT meets you at the supermarket checkout just as much as on every tradesperson's invoice — and yet even experienced self-employed people miscalculate it regularly. The reason is almost always the same: the sum is worked out in the wrong direction. This guide shows both routes, explains the formulas behind them and clears up the three most common mistakes.
A note on terminology first: colloquially the tax is called Mehrwertsteuer (value added tax), while the statute speaks of Umsatzsteuer (turnover tax). They mean the same thing. The German VAT Act does not use the term Mehrwertsteuer at all — on an invoice you may write either. If you want a quick answer, enter your amount straight into the VAT calculator; it shows net, tax and gross at the same time.
The two rates and what separates them
Under section 12(1) UStG the standard rate is 19 per cent. It applies to everything not expressly regulated otherwise — that is, to the vast majority of supplies. The reduced rate of 7 per cent under section 12(2) UStG is the exception and applies only to a closed statutory list: food, books, newspapers, local passenger transport, accommodation, admission to cultural events and a handful of further items.
On 1 January 2026 a new entry was added to that list as section 12(2) no. 15 UStG: restaurant and catering services are now permanently taxed at 7 per cent. The former split between eating in at 19 per cent and takeaway at 7 per cent is therefore history. Drinks remain excluded — a beer with your schnitzel is still taxed at 19 per cent, the schnitzel itself at 7 per cent.
Formula 1: from net to gross
The easier route runs from the net amount to the gross amount. You multiply the net figure by 1.19, or by 1.07 at the reduced rate. An example: you invoice a consultancy service with a net fee of €2,400. The VAT is €2,400 × 0.19 = €456, so the invoice total is €2,856. For a supply taxed at the reduced rate it would be €2,400 × 0.07 = €168 of tax and €2,568 gross.
You need this direction whenever you write an invoice or price a quotation. Your costing runs on the net price: that is what actually reaches you as revenue. You collect the VAT only on behalf of the tax office — economically it is never your money.
Formula 2: from gross to net
The reverse route is considerably more error-prone. Here you divide the gross amount by 1.19 or by 1.07. A receipt for €119 therefore becomes €100 net and €19 of VAT. €250 gross at 19 per cent becomes €210.08 net and €39.92 of tax.
The classic mistake at this point is deducting 19 per cent from the gross amount. On €119 that would give €96.39 instead of the correct €100 — an error of more than €3.60. The reason is simple: the 19 per cent always relate to the net amount, never to the gross. A useful benchmark: a gross amount taxed at 19 per cent contains 15.97 per cent VAT; at 7 per cent it contains 6.54 per cent. The VAT calculator always displays this share alongside the result.
When no VAT arises at all
There are three practically important cases in which you calculate with 0 per cent. First, the small-business rule of section 19 UStG: anyone whose total turnover was at most €25,000 last year and stays below €100,000 this year invoices without VAT. Second, the reverse-charge procedure of section 13b UStG, where the tax liability shifts to the recipient. And third, the genuine exemptions of section 4 UStG, for instance for certain medical treatments, lettings or educational services.
In all three cases you select the 0 per cent rate in the calculator — net and gross are then identical. What matters is the appropriate note on the invoice: without a reference to section 19 UStG or to the recipient's liability for the tax, the invoice is formally incomplete.
Step by step to the right figure
To summarise: first establish which rate applies to your supply — 19 per cent when in doubt, 7 per cent only for an item from the catalogue of section 12(2) UStG. Then decide whether the figure in front of you is net or gross. Multiply by the factor or divide by it. Show net amount, rate and tax amount separately on the invoice. And set the VAT you collect aside — it belongs to the tax office, not to you.
For day-to-day work it pays to bookmark the VAT calculator: it works in both directions, shows the same amount side by side at 19 and 7 per cent, and gives you the VAT share of the gross figure. If you also want to know what is left of your profit at year-end, the income tax calculator takes it from there. Everything in this article is non-binding orientation and does not replace tax advice.