If you are looking into prepaid phones, I suggest reading this comparison first. It will give you an idea of what options are available in your area according to SIM card availability and network coverage. It will also allow you to quickly compare rates.
FONIC: (PRE-PAID) We use Fonic and love it! It’s a pre-paid service so you can decide how much you can afford on a phone, and you can pick from HUNDREDS of different kinds of phones. You can go as cheap or expensive as you want on the phone and buy it from several vendors including Real or amazon.de. Real has a couple options and they do take VAT forms! Another option is to buy a phone from Fonic itself on a monthly installment plan, although this pricier in the end.
We bought our phones from Amazon.de. They do free shipping to your house or guest house on orders over 20€ and it arrives in about 2 days, plus if you mail your receipt and VAT form signed back to them, they will refund you the VAT directly to the card you purchased with and then send you back the copy of the VAT forms for you to turn into the VAT office.
We bought our sim cards at the Real. They sell the cards at the cash registers or you can order it from Fonic.de. Either way you have to register the sin card and need your German BLZ and bank account number. (BLZ is the German routing number, which you can get from your German bank).
Fonic is cheap and it works everywhere in the local area! Flatrate internet is 9.95€ a month for 500MB and the minutes are 9 Euro cents each to call within Germany (Roaming fees apply when outside Germany but are VERY affordable) . Also, if you needed to call a landline in the States, you could and it would be the same .09 cents you’d pay to call another German phone!!! (of course your landline is going to be cheaper if you have the Stateside call plan from TKS)
They do have a plan for 29.95€ a month with flatrate internet and 500 min/texts included!
Vodafone: (Pre-paid) These inexpensive phones can be bought at the Aafes Clothing Store on GK. They run about $30 and are an easy way to get a cell phone. The minutes and texts cost more than Fonic though and the phones are basic and cannot get internet or wifi. If you just want calls and texts (and don’t use many minutes) and you want to go with an easy route, this may be for you.
T-mobile: (pre-paid) I do know several people that went with the T-Mobile pre-paid and have had no issues so far. They purchased the sim cards at the T-Mobile store on GK and used them in phones they already had or ones they bought in a store like Real, or at Amazon.de.
CONTRACT CARRIERS: Some of the contracts seem awesome, but ask around and you will hear stories of people forgetting to cancel the contract 90 days in advance of renewal and being charged for an entire extra year of service when they leave. You will hear how people spent 400E a month because they roamed. With things like that, I said no thanks. Prepaid is just fine for us and I call/text quite a bit and I only use 10€ a month. For some people contract phones are the best fit, but they do usually come with higher monthly costs, and they may have high roaming charges if you cross into the Netherlands or other countries. You may notice that your cell phone may automatically connect to the closet cell tower (provider). You may want to make sure that you manage your connection settings on your phone to prompt you to change the network options yourself. This way you will avoid paying for roaming charges.