Net Contract Value in Public Procurement 2026

Definition: The net contract value is the contracting authority's estimated total value of a contract excluding value-added tax (net amount), which is decisive for determining the applicable procurement rules and, in particular, for comparison with the EU thresholds.

Last updated: January 2026 · Legal basis: § 3 VgV, §§ 2 ff. SektVO, Art. 5 Directive 2014/24/EU, § 12 BVergG 2018

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What is the net contract value?

The net contract value is the estimated value of a public contract excluding VAT and forms the decisive comparator for determining whether an award procedure must be conducted under above- or below-threshold rules. All EU thresholds are net amounts excluding VAT. The estimate of the contract value must be made by the contracting authority before launching the award procedure and documented in the procurement file.

Calculating the net contract value

The net contract value comprises the estimated total value of all services including all options and possible extensions, excluding VAT (§ 3 VgV). The estimate must take account of all payments the contractor is likely to receive, including:

• Base remuneration for the tendered service
• Value of any options (extension options, quantity options)
• Value of premia or payments to candidates or bidders
• Value of any option rights provided for in the contract

By contrast, performance securities, contractual penalties or other payments that do not have the character of remuneration are not included.

Distinction from the gross contract value

The key difference between net and gross contract value is VAT: the net value serves the procurement-law threshold check; the gross value is relevant for budget-law questions and budget planning. Since VAT for public contracting authorities is often deductible as input tax or does not arise for certain services, the net amount is the more appropriate comparator.

Significance for the threshold check

Where the net contract value is above the EU thresholds, the stricter above-threshold rules apply; where it is below, the less strict below-threshold rules apply. The current EU thresholds (as at 2024/2025) for public contracting authorities are EUR 143,000 for supply and service contracts and EUR 5,538,000 for works contracts (in each case net).

FAQ

Must VAT be taken into account for the threshold check? No. The EU thresholds and the procurement-law estimation of contract value always refer to the net value excluding VAT.

What happens if the actual contract value exceeds the threshold although the estimate was below it? If the original estimate was carried out with due care, a subsequent excess of the threshold is generally not problematic. Deliberate under-estimation in order to circumvent the thresholds (so-called contract splitting), however, breaches procurement law.

Which point in time is decisive for the estimate? The decisive moment is the launch of the award procedure (publication of the contract notice or dispatch of the invitation to tender).

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Last updated: January 2026 All information without guarantee. For legally binding advice, please consult a law firm specialising in public procurement.