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How to Register for German VAT

November 25, 2022

VAT stands for "value-added tax" or Mehrwertsteuer in German, while Umsatzsteuer is the more popular term. It is an excise tax, which is added to the price of products and services before being sent to the tax office. This may be deducted against a company's VAT obligation as so-called input tax (Umsatzsteuerschuld). It implies that you may recover the money you owe the tax office by subtracting the tax you paid on your purchases.

 

Therefore, the phrases value-added tax, sales tax, and input tax all refer to the same sort of tax, although from various vantage points. The final consumer bears the ultimate tax cost, with businesses or freelancers serving as tax collectors.

 

The EU's Brussels-issued Directives are the basis for Germany's domestic legislation. The present VAT Directive is applied to all 28 member states of the European Union. It regulates the criteria for VAT compliance and, to a lesser extent, the establishment of VAT rates. 

 

However, the current regular German VAT rate of 19% is still established by the German government. Please be reminded that in the event of a conflict between German VAT legislation and EU VAT Directives, the EU laws would take precedence.

 

The Value-Added Tax Act of 1980: Umsatzsteuergesetz incorporates the German VAT legislation, which is based on the EU VAT Directive (UStG). This has been altered several times since then. The Federal Parliament administers German tax legislation. Nevertheless, it is controlled by the sixteen federal states (Bundesländer).

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When Are You Required to Register for German VAT?

The United Kingdom’s Value Added Tax Act 1994 defines VAT as "a tax on the supply of goods or services."

The acronym VAT, which stands for Value-Added Tax, is well-known. It is a consumption tax imposed on the majority of B2C and B2B products and services. However, fewer individuals are aware of which items are liable to VAT. VAT is assessed on:

  • Products or services you sell for your company.

  • Sale of company assets

  • Items sold to employees, such as canteen meals

  • Commissions

Since the United Kingdom exited the EU single market and customs union, HM Revenue & Customs (HMRC) manages UK VAT separately. Upon registering for VAT, the HMRC gives companies a VAT number, which is a unique identifier. In the United Kingdom, VAT numbers consist of nine digits plus the prefix GB.

When are you required to register for a UK VAT Number?

There is no VAT registration threshold in Germany. Therefore, all organisations that make taxable supplies of goods or services must register for VAT. But, some slight differences between foreign companies and local German established companies.

Foreign Companies

Foreign cross-border entities may be required to register with the German tax authorities if they engage in various business activities. Such activities include:

 

  • Purchase and sale of goods in Germany

  • Importing and storing goods in Germany

  • Buying and selling of goods inside the European Union (intra-community supply) between Germany and other member states (arrivals)

  • Online sales to customers in Germany 

 

There is no registration threshold for foreign/cross-border businesses trading in Germany, even if these businesses are VAT/GST/Tax registered in their country of establishment.

 

A distance-selling VAT Registration threshold exists for EU Established Companies already registered in their home state (or another EU State). This EU-Wide Delivery Threshold is collectively set at €10,000 per Year across all EU states. However, for Germany, this threshold would only apply when goods are NOT stored in Germany and shipped to the end client from another EU State.

Companies Established in Germany

There is no VAT registration threshold in Germany. Therefore, when a taxable person starts doing business in Germany, they must notify the German tax authorities of their VAT registration obligation.

 

There is an exception for businesses founded in Germany whose annual revenue requirements are for a small business classification. Although they must still register for VAT, they are not obliged to submit VAT reports or pay VAT.

Common Scenarios for VAT Registration

  1. You are storing products in the country.

You must pay value-added tax when holding items in Germany or anywhere else in Europe. This includes warehousing done by yourself, as part of a fulfilment program, or by a fulfilment service with facilities in Germany. All of these situations call for VAT registration and filing VAT returns.

 

  2. You exceed the EU-wide shipping threshold by selling items to Germany.

If you reach the EU-wide delivery threshold of €10,000 and offer products or services to many European countries, including Germany, you must register for VAT.

Because exceeding the threshold makes you liable for VAT in all European nations where you sell products. Consequently, registration for VAT, filing of VAT returns, and regular VAT payment are required.

 

This is not applicable if you participate in the OSS program and solely sell items in Germany without storing them.

 

  3. You are enrolled in the FBA (Fulfilled by Amazon) program.

Under an FBA program, you enable Amazon to store your items in several countries. The PAN-EU initiative, for example, has a number of products or items held in various Western European nations such as Spain, France, and Germany.

 

As Germany participates in the program, you must register for VAT in Germany once the items are stored in a German FBA warehouse.

What are Germany's VAT rates, and When to File VAT returns?

The Standard VAT Rate in Germany is 19% and covers all taxable items not included in the reduced or zero-rate categories. 

 

German VAT returns are filed monthly under normal circumstances. However, depending on the number of annual VAT payments, the tax authorities may allow you to file quarterly. The deadline for monthly/quarterly VAT return filing is the 10th of the month after the period's end.

 

In addition to monthly/quarterly VAT returns, you must also file a yearly VAT summary report. The deadline for the yearly VAT filing is the 31st of July of the month of the following Year.

 

Please refer to the official German tax office website for more information on German VAT rates or what goods are classed under Reduced or zero rate VAT.

How to Register for German VAT?

Don't hesitate to contact Safar Start for a free consultation if you need help registering for German VAT or are unsure whether you need to register for German VAT.

 

To register for a German VAT Number (USt-IdNr.), we must first register for a General tax number (Steuernummer). Once the tax identification number has been issued, we will apply for a German VAT Number at the German Federal Office of Finance. Therefore obtaining a German VAT can take 4-12 weeks from when all documents are collected and a VAT number has been issued.

 

It is crucial that before we commence with the registration process, you gather the following documentation.

 

  • Certificate of Incorporation

  • Directors Passport Copy

  • Recent Company Utility bill / Bank Statement

  • Screenshot of Amazon Store or your Amazon.de Merchant ID

 

​Please get in touch with us for queries and concerns. We will be happy to assist.

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