E-commerce expansion unlocks exciting new customer bases, but navigating the complexities of foreign VAT regulations can be a daunting hurdle. For companies setting their sights on Germany, a crucial first step is understanding the intricacies of VAT registration. Whether you're selling physical goods or digital services, German VAT rules can significantly impact your business operations.

Whether you're selling physical goods or digital services, German VAT rules can significantly impact your business operations.

Who needs to register for VAT in Germany?

Companies with no physical presence in Germany may still need to register for VAT (Value Added Tax) if they engage in certain business activities there. Here are some scenarios that trigger VAT registration requirements:

• Storing goods in a German warehouse: If you hold inventory in a German warehouse to fulfill customer orders within the country, you'll need to register for VAT.
• Operating a German consignment warehouse: This is similar to the above, but you will need to get VAT registered only if you are importing goods outside the EU or if your goods were sold after being stored for more than 12 months on the consignment warehouse in Germany. If the goods were shipped from another EU Member state to the German consignment warehouse and sold within 12 months, then no VAT registration is needed.
• Using Fulfillment by Amazon (FBA) in Germany: If you leverage Amazon's German warehouses to deliver products to German customers, you have to be VAT registered.
• Facilitating domestic supply within Germany: Buying and selling goods within the country can trigger VAT registration requirements as goods never leave Germany.
• Organizing events in Germany: This applies to live events like conferences, art exhibitions, or educational programs held within Germany.
• Start & End Dates (estimated): Provide the expected start date of your business activities in Germany and, in case of a time-limited project, the projected end date (if known).

Regarding the VAT registration in Germany, is there a difference between EU and non-EU companies?

When it comes to VAT registration in Germany, the process for EU and non-EU companies is essentially the same. However, non-EU companies may experience a slightly longer processing time due to additional due diligence.

What are the requirements for successful registration?

Here's a list of requirements for a successful registration:

• Company Information
  • Including a copy of the articles of association, an extract from the trade register, and a certificate of VAT liability
  • These documents must contain the official company name and registered address in the country of establishment as well as contact information such as the company's phone number, email address, and other relevant contact information.
• Business Activities
  • Detailed Description: Clearly outline the specific business activities the company plans to conduct within Germany.
• Tax Representation (Optional):
  • VAT Advisor Details (Name & Contact): If you choose to appoint a VAT advisor (e.g., eVAT's Premium Service Provider) to assist with German tax matters, provide their contact information. A separate authorization form is required for them to act on the company's behalf.
• Financial Information:
  • Bank Account Details: Indicate your German bank account details for receiving tax refunds and direct debit tax payments (the preferred method in Germany).
• Physical Presence (if applicable):
  • Offices/Facilities: If your company has any physical presence in Germany, such as a branch office, sales outlet, or warehouse, list them here.
• Tax Registration Details:
  • Scope of Registration: Indicate that you are registering for Value Added Tax (VAT). Companies with a permanent establishment (e.g., branch) in Germany can also register for corporate tax here.
• Activity Timeline:
  • Start & End Dates (estimated): Provide the expected start date of your business activities in Germany and the projected end date (if known).
  • Remember that VAT registration in Germany must be completed before you start your business. Late registration can result in financial penalties from Tax Authorities.
• Foreign Tax Information:
  • Foreign Tax Authority & Number: List the tax office where you are registered in your home country and your corresponding foreign tax identification number.

How long does it take to get a VAT number?

If your file is complete, obtaining the VAT number from the dedicated Tax Office generally takes four to six weeks.
It is good to know that reminding the dedicated Tax Office of your registration will not make it any faster, so we always suggest to remain patient :)

How often do I have to submit my VAT return?

The frequency of submitting comes down to three "tempos":

• Monthly (if net VAT in the previous year was 7.500€ or higher)
• Quarterly (if net VAT in the previous year was between 1.000€ and 7.500€)
• Yearly (if net VAT in the previous year did not exceed 1.000€)

All submissions must be completed by the 10th day of the month following the taxable period. It's important to know that all companies, regardless of their submission frequency, must submit the annual report.

Every business can decide to submit its VAT returns more often than it is obligated to by the law. An example would be non-EU companies importing goods regularly in Germany and selling them on marketplaces. This would be beneficial for getting a faster refund of paid import VAT.

What if the company had no taxable sales?

As long as the VAT number is active, the company must submit VAT reports even if there were no taxable sales and the return is 0 (NIL).

Are you feeling overwhelmed by German VAT?

eVAT's Premium Service Providers take the stress out of VAT. They'll:

• Simplify registration: Ensure your application is complete and filed correctly, saving you time and headaches.
• Handle VAT representation: They'll manage your VAT compliance if required.
• Guarantee timely filing: Never miss a deadline with our dedicated support.
• Answer your VAT questions: Get expert advice on specific situations, like distance selling or VAT groups.

Don't do it alone. Contact eVAT today Contact eVAT today for a smoother German VAT experience!

Conclusion

Germany presents a lucrative market for foreign e-commerce businesses. However, VAT registration and compliance are essential. Whether selling through Amazon or offering goods and digital services on your webshop, fulfilling VAT obligations ensures smooth and legal operations. Follow the steps above and eVAT's expertise when needed to navigate the German VAT system with confidence.