The Difference Between Umsatzsteuer and Mehrwertsteuer

The Difference Between “Umsatzsteuer” and “Mehrwertsteuer” in Germany

Term, translation and basic difference

• Umsatzsteuer

  • Translation: often rendered as “sales tax” or “VAT”; in Arabic frequently translated as „ضريبة المبيعات“.

  • Basic difference: this is the official legal term used in German tax law.

• Mehrwertsteuer

  • Translation: “value-added tax (VAT)”, in Arabic usually translated as „ضريبة القيمة المضافة“.

  • Basic difference: this is the common everyday term used by the public.

Key point:
Both words refer to exactly the same type of tax.

This tax:

• is levied on goods and services supplied within Germany,

• is collected from the customer by the seller or service provider,

• is then paid over to the tax office (Finanzamt).

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Where is each term used?

• In laws and official regulations

  • Preferred term: Umsatzsteuer

• In accounting and tax returns

  • Preferred term: Umsatzsteuer

• On commercial invoices

  • Preferred term: Umsatzsteuer (often abbreviated as “USt”)

• In everyday language and advertising

  • Preferred term: Mehrwertsteuer

• On price tags in shops

  • Preferred term: Mehrwertsteuer, often shown as “MwSt” together with the rate.

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Example:

• On a restaurant bill you might read:

  • “Enthält 19 % MwSt” (“includes 19% VAT”).

• In a tax form, however, you will see:

  • “Umsatzsteuer-Voranmeldung” (advance VAT return submitted to the tax office).

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Quick comparison: “Umsatzsteuer” vs. “Mehrwertsteuer”

• Meaning:

  • Umsatzsteuer: literally “tax on turnover”, the official name for VAT in legal and administrative contexts.

  • Mehrwertsteuer: literally “tax on the added value”, the popular and marketing-friendly term for the same tax.

• Typical use:

  • Umsatzsteuer: formal, legal, administrative and accounting language; used in tax returns and in communication with the tax authorities.

  • Mehrwertsteuer: everyday speech, advertising, price labels in shops and promotional materials.

• Tax rates:

  • Umsatzsteuer: usually 19% (standard rate) or 7% (reduced rate).

  • Mehrwertsteuer: exactly the same rates, 19% or 7%.

• Are they actually different taxes?

  • Umsatzsteuer: no, it is simply the legal name for VAT.

  • Mehrwertsteuer: no, it is just the colloquial name for the same tax.

Conclusion:

• Umsatzsteuer = Mehrwertsteuer

The difference lies in the context, not in the substance:

• For formal, legal or administrative purposes you should use “Umsatzsteuer”.

• For everyday communication, marketing texts or price information, “Mehrwertsteuer” is more common and widely understood.

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Editorial note:
The editorial team of this website strives to provide accurate and reliable information by carrying out thorough research and consulting multiple sources. Nevertheless, errors may occur, and some details or figures may change over time or may not always be fully confirmed. For this reason, the information contained in these articles should be regarded as an initial, non-binding point of reference. For definitive and up-to-date information, please always consult the competent authorities or qualified professional advisers.