German VAT Information | Lovat Compliance

Goods

This guide is for e-commerce companies that sell online via web-stores or at marketplaces.

VAT Standard rate
19%

VAT Reduced rate
7%

See the summary of the EU VAT rates

Thresholds
From the 1st July 2021, the distance selling thresholds were withdrawn and replaced by a unified threshold of EUR10,000 for all EU members.
In other words, VAT should be charged at the VAT rate of the customer’s country of residence by companies whose annual taxable cross-border turnover is over EUR 10,000.

Deductible VAT
If goods or services were used to make taxable supplies in Germany, VAT in input invoices might be credited. Examples include:

VAT paid at custom clearance with your EORI number
VAT paid to German suppliers

If the company paid invoices before VAT registration it may deduct them after registration.

Registration procedure

The first step in registration involves getting a “Steurnummer,” or German tax identification number.

Those who sell in a German marketplace will also need an F22 Certificate.

When a company has the obligation to register, the owners will be required to complete and submit a VAT registration form, along with supporting documentation:

Certificate of incorporation
Trade register extract
VAT certificate
Articles of Associations
If the company is appointing a local tax agent or Fiscal Representative, then a Letter of Authority or Power of Attorney

Tax representative

There is no requirement to appoint a tax representative in Germany.

Liability for Marketplace Operators

Rules have been implemented for electronic Marketplace operators in Germany as of April 2019.

This means that global, as well as German, marketplace operators have to keep specific information and documents about traders who conduct business in Germany via their marketplace. Moreover, the marketplace operators are required to record data about the deliveries carried out.

If the trader fails to fulfill their German VAT obligations and if the marketplace operator does not meet the aforementioned archiving obligations, the marketplace operator will be liable for the outstanding VAT payments of the trader.

Therefore, marketplace operators need to take action to avoid exposure to any risks. Among other things the following actions urgently need to be considered:

Recording specific data from traders even if they are not professional dealers
Collecting and archiving a German VAT registration certificate from the trader
Documenting a date of supply/remuneration/location of departure and destination of sold goods.

Keeping records

Records about performed transactions must be kept in order to check the correctness of tax returns and payments. These records must be made available to the Federal Central Tax Office by electronic means on request. The retention period for the records is ten years.

VAT payment date

The VAT payment must be submitted by the 10th of the following month. For example, January’s payment must be submitted by 10th February, and so on.

Filing VAT returns

A taxpayer must transmit tax returns to the Federal Central Tax Office (BZSt) by electronic means. The LOVAT platform supports digital submission.

For the first year, the period for submitting preliminary VAT returns is the calendar month.

If the amount of VAT for the previous calendar year exceeds €7,500, the business owner must submit monthly preliminary returns.

A tax return must be filed even if no transactions have been performed during the relevant calendar month.

The dates for filing tax returns are as follows:

January – by 10 of February
February – by 10 of March
Yearly VAT return – 31 of May

Companies can also keep track of deadlines via the Lovat portal.

Digital services

Effective since 1 of January 2015. According to the German VAT Act («VATA»), digital services provided B2C by foreign companies are subject to German VAT if the location of the customer is Germany.

Web: Germany’s Tax Agency

VAT Standard rate
19%

VAT Reduced rate
There is no reduced rate established for digital e-commerce.

VAT calculation peculiarity
VAT= Total revenue * 19/119

Threshold
Revenue threshold is €0 for digital services.

Pieces of evidence

To identify a customer’s location, merchants have to collect at least two items on non-contradictory evidence. And if two of them are in Germany, the customer may be determined as German:

Customer’s permanent address
Billing address (bank or electronic payment operator)
IP address
Telephone number
The location of the customer’s fixed landline through which the service is supplied to him
Other commercially relevant information

E-services list

A digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website, in particular:

E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, «Audio, visual, or audio-visual products»
Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall into the audio category
Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS)
Websites, site hosting services, and internet service providers
The provision of a database
Online ads and affiliate marketing
Dating
Other services which are delivered over the internet or an electronic network due to their nature – is essentially automated and involves only minimal human participation

Registration procedure

Pursuant to Section 18 (4c) German VAT Act (UStG), entrepreneurs must register before performing transactions covered by the special arrangement in the EU. Firstly, an e-merchant needs to apply for a BZSt number in order to use the BZStOnline Portal for the VAT on e-services scheme. For VAT registration the company will be required to complete and submit a VAT registration form, along with supporting documentation:

Proof of VAT or tax registration in its country of domiciliation
A copy of the certificate of incorporation of the company
A copy of the company’s Articles of Association
If the company is appointing a local tax agent or Fiscal Representative, then a Letter of Authority or power of Attorney

Keeping records

Records about performed transactions must be kept in order to check the correctness of tax returns and payments. These records must be made available to the Federal Central Tax Office or the responsible central authority of the other EU Member States by electronic means on request. The retention period for the records is ten years.

VAT payment date

The dates for VAT payment are as follows:

Calendar quarter I by 20 April
Calendar quarter II by 20 July
Calendar quarter III by 20 October
Calendar quarter IV by 20 January

Filling VAT returns

E-service suppliers must submit this tax return to the Federal Central Tax Office (BZSt) by electronic means. Tax period is the calendar quarter. A tax return must be filed even if no transactions have been performed during the relevant calendar quarter.

The dates for filing the tax return are as follows:

Calendar quarter I by 20 April
Calendar quarter II by 20 July
Calendar quarter III by 20 October
Calendar quarter IV by 20 January

Australia

Austria

Belarus

Belgium

Bulgaria

Canada

Chile

Croatia

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Iceland

India

Ireland

Italy

Japan

Kazakhstan

Latvia

Lithuania

Luxembourg

Malta

Netherlands

New Zealand

Norway

Peru

Poland

Portugal

Romania

Russia

Saudi Arabia

Singapore

Slovakia

Slovenia

South Africa

South Korea

Spain

Sweden

Switzerland

Taiwan, China

Tajikistan

Thailand

Turkey

United Arab Emirates

United Kingdom

Uruguay

Germany

Registration procedure

Tax representative

Liability for Marketplace Operators

Keeping records

VAT payment date

Filing VAT returns

Pieces of evidence

E-services list

Registration procedure

Keeping records

VAT payment date

Filling VAT returns