At the turn of the year 2024/2025, there was a significant change in agriculture in Germany: The flat rate of sales tax — often VAT lump sum mentioned — there was a twofold reduction for farms. This development raises questions: What is behind it? Which companies are affected? And is the 2025 lump sum still worthwhile?
In common parlance, it is often used by Value added tax (VAT) Speaking — but the term is correct under tax law Sales tax (VAT). The VAT is due to the entire turnover of a company and is paid to the tax office after deduction of input tax. In agriculture, there are special regulations (§ 24 UStG) which, instead of the regular sales tax, a flat average rate can be used — the so-called lump sum.
These adjustments are motivated by EU law. Germany is obliged to adjust the lump sums annually so that they reflect the actual input tax burden — otherwise there is a risk of undue tax losses.
In future (from 2026), a recently adopted BMF procedure provides for the rates to be set annually by decree — stabilizing and relieving the burden on companies.
According to Section 24 (1) of the UStG, the lump sum differentiates:
This means that from 2025, there will be no sales tax payload for most agricultural products — the flat rate covers input tax.
Germany adjusted the flat rate from 9% to 8.4% in mid-December 2024 in order to achieve an EU-compliant adjustment to the actual input tax burden.
Less than a month later, on January 1, 2025, the new rate of 7.8% in force, based on an updated calculation by the Federal Ministry of Finance. The rapid rhythm was criticized by economists as bureaucratic and time-consuming.
Adjusting rates twice within a few weeks means a lot of bureaucracy: Farmers must check invoices and correct them retroactively if necessary — in particular for benefits in December 2024, which could fall both below 8.4% and retroactively below 7.8%.
A falling flat rate means less pre-tax lump sum — this can lead to revenue losses on both small and large companies. Larger companies are therefore considering a switch to standard taxation in order to claim actual input tax.
As from 1 January 2025, the following applies: All B2B invoices must be made electronically — in structured XML format such as XRechnung. PDF is no longer enough. This also applies to farms that issue invoices to other companies.
On July 1, 2025, EU directives were implemented which make it clear that export deliveries can be exempt from sales tax even without traditional customs stamps — if appropriate documents (e.g. certificates from public authorities) are proven.
From 2026, the flat rates are to be set by legislative decree — based on an EU-compliant formula. This promises greater predictability.
Die VAT lump sum For farms, from January 1, 2025, on 7.8% reduced — as a result of EU legislation to adjust input tax. This regulation applies to businesses with a maximum annual turnover of 600,000€ and primarily includes classic agricultural products such as milk, meat, cereals. At the same time, the payload remains zero for many companies.
But the five-fold change within a few years — from 10.7 to 9.5, then 9%, 8.4% and most recently 7.8% — led to additional expenditure. From 2026, the determination of more stable means of regulation is to take place.
Farmers must pay particular attention to invoice corrections, electronic invoicing and export certificates in 2025 in order to be optimally prepared for tax purposes. For many, a switch to regular taxation could be worth considering.
