If you’re a foreign merchant doing business in Germany, understanding the Value Added Tax (VAT) regulations is crucial. Failure to comply can result in penalties and complications. In this guide, we’ll break down the essential steps and considerations for VAT registration and compliance in Germany.
VAT Registration Requirements in Germany
As a foreign merchant, you’ll need to register for VAT in Germany under two circumstances:
- Meeting the Thresholds: If your annual turnover exceeds the threshold of €100,000 under the distance selling regime or if you hold stock in Germany (e.g., utilizing an Amazon FBA warehouse).
- Stock in Germany: When you store goods in Germany, even temporarily, VAT registration is mandatory to report the intra-community acquisition.
It’s important to note that the small business exemption does not apply to businesses established outside of Germany.
VAT Representative Requirement
Unlike some other European countries, Germany allows non-European businesses to register for VAT without appointing a VAT representative. This reduces administrative burdens and the risk of joint liability for unpaid VAT.
Filing Frequency and Returns
The filing frequency for VAT returns in Germany depends on your revenue:
- Annual Returns: Businesses with revenues between €1,000 and €700,000 file annual returns.
- Quarterly/Monthly Returns: Businesses with higher revenues may be required to file quarterly or even monthly returns.
The Shower Number and VAT Number
Germany follows a unique process where they assign a “Steuernummer” (tax number) first, followed by a VAT number. The tax number is sufficient for reporting consumer sales in Germany. However, you’ll need a VAT number for intra-community acquisitions or movements of goods from Germany to other European countries.
Intrastat and Dispatching Transat Forms
If your business exceeds certain thresholds, you’ll need to file additional forms:
- Arrival Intrastat Forms: If you move goods worth over €800,000 from the EU to German warehouses.
- Dispatching Transat Forms: If you ship goods worth more than €500,000 per year from Germany to other European countries.
Domestic Reverse Charge and Anti-Fraud Rules
Unlike countries such as Italy, France, and Spain, Germany does not apply domestic reverse charge to transactions made by non-established businesses. For sales of goods between a non-established VAT subject with a German VAT number and a local acquirer, German VAT must be applied, unless specific anti-fraud rules apply.
Seeking Professional Guidance
Navigating German VAT regulations can be complex, and the tax authorities are known for their rigorous audits and inquiries. We strongly advise merchants to consult a professional tax advisor to ensure VAT compliance in Germany.
Have you encountered any specific VAT issues while trading with Germany? We’d love to hear about your experiences and insights.
Remember, while this guide provides general information, it’s important to seek personalized advice from a tax professional to address your specific circumstances.
