Looking to increase your sales in 2019? Why not try selling in Germany!
Here are 10 useful tips relating to your German VAT obligations!
The German online market is 2nd largest in Europe, with 68 million people (84% of the German population) online regularly.
It is predicted that sales will reach 100 billion Euros by 2020, helped by the fact that internet sales have increased by over 70% since 2012. The German e-commerce market is dominated by Amazon.de, which is the biggest marketplace followed closely by Otto.de. With all this selling potential, it’s a very attractive market for cross-border online sellers to benefit from selling into Germany to a receptive and mature online market.
There is, however, a little more to think about then setting up your online account, including knowing which German VAT (MwSt) rules will affect you when selling to consumers based in Germany.
- Foreign companies can register for VAT in Germany without the need to form a local company.
- There is no need to have a fiscal representative if you are a company based outside the EU.
- VAT registration usually takes 4 – 6 weeks, from the moment that the complete registration documentation has been submitted to the German Tax Authorities, however, recently, there has been a backlog and some VAT numbers are taking up to 8 weeks to be issued.
- EU VAT Distance Selling Rules – If you’re selling online from within the EU (but outside Germany) via your website or through the marketplaces such as amazon.de or Otto.de directly to German private customers, you can sell up to Euros 100,000 worth of goods (including shipping) before you have to register for VAT in Germany.
In most other EU countries the distance selling threshold is Euros 35,000, except in Netherlands, Germany and Luxembourg – where is it Euros 100,000; and the UK, where the distance selling threshold is GBP 70,000.
5. Using Fulfilment Centres in Germany – If you use a fulfilment centre in Germany (including Amazon FBA) to house your stock to supply private customers, this triggers an immediate need to VAT register in Germany – there is no threshold to exceed.
6. From sales delivered from stock held in Germany, you will have to monitor your distance sales to customers in other EU countries.
7. The standard VAT rate in Germany is 19%, the reduced rate is 7%. The reduced rate is used on products such as physical books.
8. Once VAT registered, VAT returns in Germany are required monthly. The deadline for monthly returns is the 10th of the month following the reporting period. VAT returns can also be quarterly if turnover is below Euros 47,000 per annum. There is an obligatory annual VAT return to file.
9. Additional reporting such as Intrastat Declarations and EC Sales Lists – In addition to VAT returns, if your turnover exceeds the Intrastat Declaration threshold (in Germany it is Euros 500,000) you will be obligated to file monthly Intrastat declarations as well as your monthly VAT returns.
10. Invoices to private customers are compulsory in Germany