Taxes on Farmers and Agriculture in Germany
(Besteuerung der Land- und Forstwirtschaft in Deutschland)
Under German tax law, a person is treated as a farmer or forester (Land- und Forstwirt) if he or she:
owns or manages an agricultural, livestock or forestry operation, and
earns income from the sale of agricultural or forestry products, such as crops, fruit, vegetables, milk, meat, eggs, timber, etc.
Agriculture (Landwirtschaft) and forestry (Forstwirtschaft) form the income category “Einkünfte aus Land- und Forstwirtschaft” (income from agriculture and forestry) within the income tax system.
| Type of tax | Is it levied? | Details |
|---|---|---|
| Income tax (Einkommensteuer) | Yes | Charged on net income (revenues minus agricultural expenses) |
| Value added tax – VAT (Umsatzsteuer / USt) | Yes | Either 19 % or 10.7 % under the special flat-rate farmer scheme (Pauschalierung) |
| Trade tax (Gewerbesteuer) | Usually no | Exempt if the activity is purely agricultural; trade tax may apply if there are additional commercial activities (e.g. own dairy factory, processing plant) |
There are three main methods to determine income from agriculture and forestry:
| Method | Suitable for | How it works |
|---|---|---|
| 1. Flat-rate assessment (Luf-Pauschalierung) | Small and medium-sized farms | Income is estimated based on objective criteria such as land area, type of use and livestock numbers |
| 2. Simplified cash-based method (EÜR) | Medium-sized farms | Einnahmen-Überschuss-Rechnung (EÜR) – a simple profit calculation: income minus expenses |
| 3. Full commercial accounting (Bilanzierung) | Larger farms or agricultural companies (e.g. GmbH) | Full double-entry bookkeeping with balance sheet, profit and loss account and inventory valuation |
Farmers can choose between two systems:
The farmer shows 10.7 % VAT on his invoices as a flat-rate output tax.
In return, this is considered final, and he does not claim input VAT (Vorsteuer) from purchase invoices.
This system is usually advantageous if the farmer has relatively low input costs and investments.
The farmer applies the standard VAT rate of 19 % (or other general rates) on his sales.
He can then deduct input VAT from his purchases (e.g. machinery, seeds, feed, fertilisers).
This system is typically beneficial if the business has significant investments, machinery purchases or high operating expenses.
Subsidies and grants from the EU or German authorities (e.g. Agrarförderung) generally count as taxable business income.
Depending on the type of subsidy (investment aid, ongoing operating support), special tax rules may apply, such as spreading the grant over several years or linking it to depreciation rules.
| Return | Required? | When? |
|---|---|---|
| Income tax return (Einkommensteuererklärung) | Yes | Annually, including income from agriculture and forestry |
| VAT return (Umsatzsteuererklärung) | Yes | Annual VAT return plus periodic advance returns (monthly or quarterly, depending on turnover) |
| EÜR or balance sheet + Anlage L | Yes | Depending on farm size and accounting method; Anlage L is the specific schedule for agricultural and forestry income |
| German term | Meaning in Arabic |
|---|---|
| Land- und Forstwirtschaft | الزراعة والغابات |
| Pauschalierung | نظام النسبة الثابتة / التقدير الجزافي |
| Umsatzsteuer (USt) | ضريبة القيمة المضافة |
| EÜR (Einnahmen-Überschuss-Rechnung) | حساب الربح والخسارة المبسط |
| Anlage L | استمارة الدخل الزراعي في الإقرار الضريبي |
| Agrarförderung | الدعم الزراعي / الإعانات |
Farmers pay income tax on their profits from agriculture and forestry.
For VAT, they can choose between a simplified flat-rate scheme (10.7 %) and the standard system (19 % + input VAT deduction).
Pure agricultural activity is usually exempt from trade tax (Gewerbesteuer).
Farmers must file annual income and VAT returns, plus EÜR or balance sheet and Anlage L depending on farm size.
Agricultural subsidies and grants are generally taxable income and must be included in the profit calculation.
The editorial team of the website strives to provide accurate information based on thorough research and multiple sources. Nevertheless, errors may occur or certain details may be incomplete or not fully verified. Please treat the information in this article as an initial reference only and always consult the competent authorities or a professional tax adviser for binding and up-to-date guidance.
