VAT tax in Germany 2024: A guide for e-commerce sellers

Germany, being one of the largest e-commerce markets in Europe, attracts the attention of many sellers from around the world. However, before you start your business in this market, it is essential to understand the intricacies of VAT tax in Germany. VAT registration, tax rates, declaration deadlines, and tax penalties are just some of the elements worth knowing. Here is a guide for e-commerce sellers planning to operate in the German market.

VAT rates in Germany

Germany applies three main VAT tax rates:

Standard rate: It stands at 19% and covers most goods and services.
Reduced rate: It is 7% and applies to selected products and services such as groceries, certain medical services, short-term accommodation, cultural events, or medical care.
0% rate: It applies to intra-Community and international transport, excluding road and rail transport, as well as certain means of transport for inland navigation.

You can learn more about VAT tax in Germany on our website: Germany VAT – The Rates & Registration.

Tax identification numbers in Germany

In Germany, a company can obtain two important tax identification numbers: Steuernummer and Umsatzsteuer-Identifikationsnummer (USt-IdNr).

Steuernummer, similar to the Polish Tax Identification Number (NIP), is necessary for conducting transactions with German companies and for identifying the enterprise in the tax office. It consists of 10 or 11 digits separated by slashes.

Umsatzsteuer-Identifikationsnummer, also known as VAT DE number, is essential for carrying out intra-Community transactions and serves as the equivalent of the Polish VAT UE number. Entrepreneurs operating in the intra-Community market, providing taxable services, or using services from other countries must apply for the USt-IdNr number along with the VAT registration application in Germany. The Umsatzsteuer-Identifikationsnummer consists of 9 digits preceded by the prefix DE.

VAT registration in Germany

VAT registration in Germany is mandatory for companies from outside the country that carry out taxable transactions on its territory. It is important to start the registration process before commencing business to avoid potential penalties from the German tax authorities. Registration forms are available only in German, so it is often advisable to use the services of tax representatives to facilitate this process.

Foreign companies wishing to register for VAT purposes in Germany must take this step at the appropriate tax office, which is designated based on the first letter of the company name:

• Companies with names starting from A to G – Tax Office in Hameln
• Companies with names starting from H to L – Tax Office in Oranienburg
• Companies with names starting from M to R – Tax Office in Cottbus
• Companies with names starting from S to Ź – Tax Office in Noerdlingen.

The VAT registration procedure in Germany is conducted by correspondence. The entrepreneur must provide documents such as a signed registration form (Fragebogen), a cover letter, copies of identity documents, confirmation of a bank account, VAT registration certificate in the EU, a copy of the company’s articles of association translated into German, or proof of registration in the company register with a sworn translation.

You can learn more about VAT registration in Germany for the e-commerce sector from our article: https://amavat.eu/vat-registration-in-germany-for-the-e-commerce-sector-key-information-and-important-changes-for-2024/.

If you need assistance with VAT registration in Germany, feel free to contact our experts.

Waiting for the VAT DE number

Currently, waiting for the assignment of the German VAT number can take up to 2-3 months. Therefore, it is recommended to start the registration procedure before planned taxable transactions.

VAT declarations and tax payment

In Germany, there are three types of VAT declarations: monthly, quarterly, and annually. The deadlines for submitting declarations are set by the tax office and vary depending on the company’s tax situation.

Reverse Charge Mechanism

In Germany, the reverse charge mechanism shifts the VAT reporting obligation from the supplier to the buyer in certain situations, including services and goods deliveries with assembly in the construction industry. Even non-registered VAT buyers must register and account for tax in transactions covered by this mechanism. There are exceptions, e.g., for passenger transport services. Germany has also introduced detailed rules for B2B services provided to German customers by companies outside Germany. Additionally, there are special rules for goods deliveries and certain services, especially when consumed outside the EU. In some cases, such as scrap metal, reverse charging is applied regardless of the supplier’s status, aiming to prevent tax fraud.

Data on VAT Invoice

German invoices must include the following data:

• Seller’s information: Name, address, VAT number.
• Buyer’s information: Name, address, VAT number.
• Invoice number.
• Date of issue and date of delivery of goods.
• Description of goods, quantity/weight.
• Net amount, VAT, gross amount.
• Applied VAT rate.
• Annotation for 0% VAT rate, if applicable.
• Annotation for reverse charge, if applicable.
• Currency of the invoice.

Tax penalties

Tax penalties in Germany are severe for companies that do not comply with tax regulations, even if they do not have a presence in this country:

• Delay in VAT payment incurs a penalty of 1% of the due tax amount per month, with additional late payment interest.
• Failure to submit a declaration may result in a penalty of up to 10% of the declared tax, up to a maximum of €25,000.
• Companies registered after the mandatory deadline usually avoid penalties, but in case of serious violations, individual penalties may be imposed by the tax office.

Summary

In conclusion, e-commerce sellers operating in the German market should be aware of the complex VAT regulations. Understanding these issues and deadlines will help avoid unpleasant consequences such as tax penalties and other sanctions. Therefore, it is worth familiarizing yourself thoroughly with Germany’s tax requirements before starting business in their market.

Thanks to amavat®, you can focus on running your e-commerce business, knowing that all accounting and tax matters will be properly handled. Our knowledge and experience ensure the management of your finances, providing you with peace of mind and time to focus on what you do best – growing your business!

In case of any doubts or need for professional advice, we offer comprehensive support in the registration and settlement of VAT within Europe through our VAT Compliance service: Contact us – amavat®.