VAT registration and filing of VAT returns in Germany
Compliance with VAT in Germany
What do we need to know if we trade on German territory in relation to our obligation to register for VAT there?
When am I obliged to register for VAT in Germany?
If you are a Taxable Person registered in Bulgaria (or any other EU country except Germany) and make sales via an e-shop or a market place to Natural Persons in Germany (B2C), you may be subject to registration obligation in Germany in the following cases:
- Distance sales on German territory
- Dropshipping
- Selling goods that have been previously transported to a warehouse of a market place, a fulfilment centre or a warehouse rented by you in Germany, from where you send them to customers (Amazon.de, Ebay.de, etc.)
- Other less common cases
What are the distance sales on German territory?
For example: You are a company registered in Bulgaria and have an e-shop (or use a platform) and sell goods to natural persons (or non-taxable persons) in Germany. The goods are located in Bulgaria and when ordered by a customer they are sent with a courier company from Bulgaria. In this case you make distance sales in Germany and after reaching a certain volume of sales (for Germany it is relatively high - EUR 100 000) you are obliged to register for VAT there. The amount of sales revenue shall be calculated per calendar year.
Dropshipping
For example: You are a company registered in Bulgaria (or another EU country) and sell goods to natural persons (or non-taxable persons) in Germany and other EU countries (B2C) via your own e-shop or via a platform (e.g. eBay, etc.). You do not maintain goods on site and at each sale you purchase the sold goods from your supplier in Germany (manufacturer, dealer, amazon.de, etc.) who sends them directly to your customer. In this case, it is assumed that you become the owner of the goods before they are shipped to your clients and that you incur a VAT registration obligation in Germany before your first sale takes place. If your business model provides for such transactions, you need to take steps to register for VAT before you start selling, also take into account the relatively long procedure associated with this, which is about 1 month.
Selling goods that have been previously transported to a warehouse of a market place, a fulfilment centre or a warehouse rented by you in Germany, from where you send them to customers.
For example: You are a company registered in Bulgaria or another EU country and you have decided to make sales through Amazon (Amazon.de) and for that purpose you must deliver your goods in an Amazon warehouse in Germany. This obliges you to register for VAT in Germany before your first sale takes place. Moreover, Amazon is responsible for fulfilling your tax obligations and would not open an account without VAT registration. The aim is for you to charge and pay VAT for all your sales where the goods are consumed, namely in Germany.
You should bear in mind that if you sell from a warehouse you have rented and/or have hired staff, there will be an obligation for you to register a permanent establishment in Germany, which will entail additional obligations for you.
Other less common cases
These may be cases in which a company from Bulgaria (or another EU country) imports from a third country into the territory of Germany and subsequently sells the goods, whether in Germany or in another country.
Also, the company's involvement as part of a chain in successive deliveries within several EU countries and similar cases.
Other things to bear in mind in relation to VAT registration in Germany:
- Initial VAT registration takes 4 weeks after the necessary documents have been submitted to the German tax administration;
- The basic VAT rate is 19% but can also be 7%;
- The deadline for submitting VAT returns and paying VAT is by the 10th day of the month following the month to which it relates (the earliest deadline from all EU countries);
- Frequency of submission of VAT returns - initially VAT returns are submitted monthly and the German Tax Administration may subsequently decide to change the frequency of submission - for example quarterly.
If you need advice or assistance with VAT registration and filing VAT returns in Germany, please contact us.
