EU E-commerce Sellers: Navigating VAT Obligations for Sales from Germany

Overview of VAT in the EU

The EU’s VAT system involves a single market where goods and services are generally taxed at the same rate across member states, but each country sets its own VAT rates. For sellers based in Germany and dealing with transactions across the EU, understanding these rates is crucial for compliance and smooth operations.

Please note: since we are dropshipping suppliers and deal with you, our trade customer (B2B), and not the end customer, this guide is based on where you are based as opposed to where the product is shipped to the end customer. Our products are shipped from our warehouse in Germany to your end customer anywhere in the Europe

For example, if you are based in Germany, we will levy a 19% tax rate on checkout that is calculated automatically. This figure goes down to 0% across these countries if you have a valid VAT number.

 Criteria for Charging VAT in the EU

Sellers must charge VAT if they meet the following criteria:

1. Conduct Business in the EU: Regularly and continuously selling to EU customers and utilizing resources such as warehouses, bank accounts, or advertising within the EU.
2. Sell Taxable Supplies: Most goods and services sold online fall under taxable supplies.
3. Exceed Distance Selling Thresholds: Annual sales to customers in other EU countries exceed the country-specific thresholds.

Registration and Compliance

• VAT Registration: Register for VAT in Germany and other EU countries if you surpass the distance selling thresholds.
• VAT Returns: Filing frequency depends on sales volume and the specific requirements of each EU country.
  • Monthly, quarterly, or annually depending on sales volume and local regulations.

Distance Selling Thresholds

Each EU country has specific thresholds for distance selling beyond which sellers must register for VAT in the destination country:

• Austria: €35,000
• Belgium: €35,000
• Bulgaria: BGN 70,000
• Croatia: HRK 270,000
• Cyprus: €35,000
• Czech Republic: CZK 1,140,000
• Denmark: DKK 280,000
• Estonia: €35,000
• Finland: €35,000
• France: €35,000
• Germany: €100,000
• Greece: €35,000
• Hungary: €35,000
• Iceland: €35,000
• Ireland: €35,000
• Italy: €35,000
• Latvia: €35,000
• Lithuania: €35,000
• Luxembourg: €100,000
• Malta: €35,000
• Netherlands: €100,000
• Norway: NOK 50,000
• Poland: PLN 160,000
• Portugal: €35,000
• Romania: RON 118,000
• Slovakia: €35,000
• Slovenia: €35,000
• Spain: €35,000
• Sweden: SEK 320,000
• Switzerland: CHF 100,000
• Turkey: TRY 220,000
• United Kingdom: £70,000

Additional Considerations

• Accounting Software: Utilize tools like QuickBooks Online, Xero, and Avalara for VAT tracking and compliance.
• Record Keeping: Maintain accurate sales records for at least ten years as required by EU law.
• One-Stop Shop (OSS) Scheme: Consider using the OSS scheme to simplify VAT compliance across multiple EU countries.

Resources for Further Information

• EU Commission: Provides detailed guidelines and resources for VAT obligations.
• National Tax Authorities: Each country’s tax authority offers specific rules and registration requirements.
• Professional Advice: Consult with tax professionals to ensure comprehensive compliance

Understanding and complying with VAT obligations is essential for successful business operations within the EU. Proper registration, accurate record-keeping, and utilizing reliable accounting software will ensure compliance and facilitate smooth operations for sellers shipping products from Germany to other EU countries.