PayPal fees and VAT in Germany: is there input VAT?

You sell online, buyers pay with PayPal, and PayPal's statement shows fees. Do you enter input VAT for them in your VAT return? Only if VAT arises on the fee. PayPal's user agreement says that no VAT arises on PayPal services in the EU. Then there is nothing to deduct, but the fee is still a business expense.

Last updated: 27 October 2026

In brief

Input VAT requires that another business charged you VAT and that you hold an invoice for it (§ 15 para. 1 no. 1 UStG). If no tax arises on the PayPal fee, there is no input VAT.
PayPal describes itself as a bank in its German user agreement and says (our translation): "As a banking service, no VAT is due on PayPal services in the EU."
EÜR: the fee counts as a business expense (§ 4 para. 4 EStG), with or without input VAT.

Does the PayPal fee carry VAT?

Start with what PayPal says. According to the German user agreement, the services for registered customers in the European Economic Area are provided by PayPal (Europe) S.à r.l. et Cie, S.C.A., based in Luxembourg and licensed as a bank. The section "Steuern und Berichterstattung" (taxes and reporting) adds that you alone are responsible for working out and paying your taxes, and that PayPal does not determine whether tax arises on your transaction.

The statute fits: § 4 no. 8 letter d UStG exempts the supplies and the brokering of supplies "im Einlagengeschäft, im Kontokorrentverkehr, im Zahlungs- und Überweisungsverkehr" (deposit business, current-account business, payment and transfer transactions). Whether a fee falls under this depends on the kind of service, not on what the statement shows: you can only deduct tax that is legally owed (§ 15 para. 1 no. 1 UStG), and a taxable service from a business in Luxembourg comes without German VAT, because you then owe the tax yourself (§ 13b UStG, see below).

The terms carry a date ("Letzte Aktualisierung 7. September 2026", read on 27 October 2026). For an audit, check the version that applied when the fee was charged.

What does that mean for input VAT?

You may deduct "die gesetzlich geschuldete Steuer" (the tax legally owed) on supplies another business made for your business, and you need an invoice under §§ 14, 14a UStG (§ 15 para. 1 no. 1 UStG). If the service is exempt, there is no tax owed that you could deduct.

For the VAT return: if the fee is exempt, as PayPal states, you enter neither input VAT nor tax under § 13b UStG for it. More on filling the return: File your VAT return online.

Do I need the reverse charge because PayPal is based in Luxembourg?

The Luxembourg seat is why the question comes up. Under § 13b para. 1 UStG, the tax arises on services "taxable in Germany under § 3a para. 2" supplied by a business established elsewhere in the EU at the end of the return period, and the recipient owes it if they are a business (§ 13b para. 5 UStG). The rule needs a taxable service. If the fee is exempt under § 4 no. 8 UStG, there is no taxable service for which you would have to declare tax.

If your case differs, for example PayPal services that are not payment services, ask your tax adviser. The mechanism itself is explained here: Reverse charge under § 13b UStG.

How do you book the fee in your EÜR?

Business expenses are "expenses caused by the business" (§ 4 para. 4 EStG). With the EÜR you take the surplus of business income over business expenses as your profit (§ 4 para. 3 EStG). The PayPal fee on your sales is business-related and goes into the EÜR as its own expense, in the amount on the statement.

For VAT, your consideration is what you receive in return for your supply, less the VAT legally owed (§ 10 para. 1 UStG). So work with the selling price, not with the amount that reaches your account after the fee. What else belongs in the EÜR: Business expenses list for the EÜR.

Is it the same for marketplace fees?

Not automatically. Marketplaces offer other services than payment services, and their invoices show VAT or not depending on the type of fee. Read per marketplace: eBay fees and input VAT and Amazon fees and input VAT.

Common mistakes

Entering input VAT out of habit. No tax is owed on an exempt fee, so there is nothing to deduct.
Not booking the fee at all. It is a business expense, even without input VAT.
Booking the payout as income. For VAT, the consideration you receive for your sale counts.
Treating the user agreement as an invoice. To book the fee you need the statement with the fee amounts.

How VAT GPT helps

VAT GPT is the tax software for Amazon and eBay sellers in Germany: your OSS return first, then every other tax you owe, calculated and filed in one place. You can upload invoices, the AI reads amounts, countries and tax rates, and you check and confirm them. From your figures VAT GPT creates the VAT return and the EÜR; with VAT GPT Pro you send them through ELSTER. There is Free, Go (30 days free with all Pro features) and Pro (€49 per month or €444 per year, including VAT). Try for free now

Frequently asked questions

Are PayPal fees subject to VAT? PayPal's German user agreement says (our translation): "As a banking service, no VAT is due on PayPal services in the EU." The exemption for payment and transfer transactions is in § 4 no. 8 letter d UStG.

Can I claim input VAT on PayPal fees? Only on separately shown tax that is legally owed, with an invoice (§ 15 para. 1 no. 1 UStG).

Are PayPal fees business expenses? Yes, if the business caused them (§ 4 para. 4 EStG).

Do I need the reverse charge because of the Luxembourg seat? § 13b para. 1 UStG covers taxable services. A fee that is exempt under § 4 no. 8 UStG is not one.