VAT
noun · Umsatzsteuer
Umsatzsteuer is the statutory name, § 1 UStG; Mehrwertsteuer is the same tax in everyday and invoice usage, not a different one. Two things an English reader trips on: the recoverable input side is Vorsteuer, § 15 UStG, and American sales tax is not VAT at all.
Which translation, when
Why
VAT translates cleanly as Umsatzsteuer, and the difficulty is everything around the word. First, the name: the statute levies Umsatzsteuer, § 1 UStG, while Mehrwertsteuer is the colloquial and invoice term for the identical tax, so a text that treats the two as different taxes invents one. Second, direction: English uses VAT for both the tax a business charges and the tax it recovers, whereas German separates the output Umsatzsteuer from the input Vorsteuer it deducts, § 15 UStG, and a sentence about recovering VAT is really about Vorsteuer. Third, the false friend that costs the most: United States sales tax is a single-stage retail tax, not a VAT, so rendering it as Umsatzsteuer imports a multi-stage credit system that sales tax does not have. The rate sits at nineteen per cent, with a reduced seven per cent for certain goods and services listed in § 12 Abs. 2 UStG, and the whole tax is harmonised across the EU, so the German rules track the VAT Directive rather than standing alone. Where the recipient rather than the supplier owes the tax, the mechanism is Reverse-Charge, § 13b UStG.
Typical mistakes
- Umsatzsteuer and Mehrwertsteuer are the same tax, the first statutory and the second colloquial, § 1 UStG; writing as though a supply bears both, or treating MwSt as a separate charge, doubles one tax.
- VAT the business recovers is Vorsteuer, § 15 UStG, not the Umsatzsteuer it charges; collapsing input and output into one word loses the deduction that makes the system work.
- US sales tax is not VAT: it is a single-stage retail tax without input credit, so rendering it Umsatzsteuer, or VAT as sales tax, misstates the mechanism and the recoverability.
What matters
Invoicing and pricing clauses that say plus VAT need the German split named: Umsatzsteuer on what is charged, § 1 UStG, Vorsteuer on what the buyer can recover, § 15 UStG. Cross-border supply terms turn on who accounts for the tax, and a plus-VAT line hides the Reverse-Charge case where the recipient owes it, § 13b UStG.
What the machine misses
VAT arrives as Mehrwertsteuer or Umsatzsteuer more or less at random, and both name the same tax, § 1 UStG, so the word itself is safe. What the machine loses is the input side: the VAT a business recovers is Vorsteuer, § 15 UStG, a separate German word, and a translated sentence about reclaiming VAT that keeps Umsatzsteuer describes charging the tax rather than deducting it. It also renders US sales tax as if it were VAT, which imports a credit mechanism sales tax does not have.
Examples
| plus VAT at the standard rate | zuzüglich Umsatzsteuer zum Regelsatz |
| to recover input VAT | die Vorsteuer abziehen |
| the price is inclusive of VAT | der Preis versteht sich inklusive Umsatzsteuer |
| a VAT-registered business | ein umsatzsteuerlich registriertes Unternehmen |