Thinking of selling your products online in Germany?
The German Market
The German online market is the second largest in Europe – with 68 million people (84% of the German population online regularly). Sales are predicted to reach 100 billion Euros by 2020. Internet sales have increased by over 70% since 2012. Amazon.de is the biggest marketplace followed closely by Otto.de.
According to emarketer.com, 81.5% of internet users are expected to make a digital purchase making. With all this potential, it is 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 when setting up your Amazon.de or Otto.de account, including knowing which German VAT (MwSt) rules will affect you when selling to consumers based in Germany.
Here are 12 useful tips relating to your German VAT obligations!
- Foreign companies can register for VAT in Germany without the need to form a local company.
- Voluntary registration is possible in Germany. You may want to voluntarily register to take advantage of the lower 19% VAT rate in order to increase your profit margins.
- There is no need to have a fiscal representative if you are a company based outside the EU selling into Germany.
- VAT registration usually takes 4 – 6 weeks, 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 sell 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 €35,000, except in Netherlands, Germany and Luxembourg – where is it €100,000; and the UK, where the distance selling threshold is £85,000
- 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.
- From sales delivered from stock held in Germany, you will have to monitor your distance sales to customers in other EU countries.
- The standard VAT rate in Germany is 19%, the reduced rate is 7%.
- 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 €47,000 per annum. There is an obligatory annual VAT return to file.
- 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.
- Invoices to private customers are compulsory in Germany
- The German tax authority will issue penalties and interest charges for non-compliance.
Confused about your VAT obligations?