German VAT legislation 2019: Tax certificate / tax-registration / tax-ID
In late 2018 Germany passed a new law concerning online trade coming into effect on January 1st, 2019. As a consequence, online sellers on Amazon, eBay, or other online trading platforms will have to comply with new Value Added Tax (VAT) regulations in Germany. Sellers need a tax-registration and a German tax-ID. Furthermore they have to apply for a tax-certificate and to forward it before beeing able to continue sellling on Amazon & Ebay. One of the reasons for this measure is the still high number of online trades who didn’t fulfill their liabilities concerning the German VAT. Another purpose might be collecting data on the scale of online trade as a whole. This would also explain why the recent law addresses all online traders alike, regardless if they are subject to VAT taxation or not.
1. Registration for VAT and the tax certificate
Anyway, the step that has been taken to enforce the application of the new regulation is quite drastic, since it addresses the providers of the online marketplaces to be responsible for any violation by their business sellers. For obvious reasons, Amazon, eBay, and other providers are not going to risk such a consequence. They informed the online vendors and made it clear that a continuation of their trade will only be possible, if they comply with the new regulations.
Thus, online sellers are obliged to register for VAT if they meet at least one of the 3 conditions listed below:
- Vendors established in Germany and who sell their goods to customers in Germany
- Merchants who sell their goods from a warehouse in Germany, or in the EU to customers in Germany
- Traders who sell their goods from a non-EU country to customers in Germany by submitting import clearance declarations
The need to apply for a tax clearance certificate does not depend on the tax (VAT) liability in Germany. In general, just by selling goods in Germany online merchants must apply for a tax clearance certificate. Successful registration will be attested by a certificate according to § 22f UStG. The certificate will be legal for a maximum of 3 years (until December 31st, 2021).
Furthermore, online traders residing in a country outside the European Economic Area (EEA) affected by the new German VAT law regulations (e.g. Brazil, Canada, China, India, and Turkey) must register their companies for tax purposes in Germany, too.
2. Authorized domestic agent
One more change affects online vendors residing in countries outside the EEA. If they sell goods in Germany submitting import clearance declarations than they will have to appoint an authorized domestic agent as a recipient for correspondence from the tax office.
3. Tax certificate: timetable for the new regulations
The timeframe for the implementation of the new regulation seems to be ambitious to say the least. It is questionable, if the tax offices will be able to handle all applications in time. This skepticism is underlined by the fact that only one tax office is designated to have jurisdiction for all African, Asian (except Turkey), Australian, Canadian, as well as South and Middle American traders.
For online traders residing within the EEA (i.e. all EU member states, Iceland, Liechtenstein, and Norway) the new law will be applied by October 1st, 2019 and for those who are residing outside the EEA as early as March 1st, 2019. In both cases, merchants should take action as soon as possible.
Another piece of evidence showing that the timeframe has been chosen too tight is the fact that up to now there are no forms for tax registration in other languages than in German and French. At least, the form concerning the tax clearance certificate according to § 22f UStG is available in German and English.
4. Tax certificate: consequences for the violation of the new regulations
It has already been stated that online trading markets like eBay or Amazon are made responsible for any violation of the new regulations. Thus, they made clear statements that they will comply with the requirements implemented by the German taxation law and the corresponding negative consequences if these are not fulfilled by the online traders. Accordingly, they will stop cooperating with online vendors who don’t meet the terms. Only with such a certificate they may continue to sell via eBay, Amazon, and other online trading platforms.
Of course, this is especially true concerning VAT taxation. In the past, a high percentage of the online trade in Germany has taken place without proper taxation leading the authorities to take action in order to prevent losses in VAT revenue. The new law aims to ensure that this won’t be possible anymore.
5. VAT taxation in Germany
In general, the VAT rate in Germany is 19 %. One exception affects the sale of books and food items which is charged by 7 %. Trading with private persons, the price includes VAT but has to be declared on the bill separately. Wholesalers trading with other merchants give their prices without VAT but have to include and declare the amount on their bill, too.
6. Importance of the distance selling threshold
VAT-registered traders residing in the EU who sell their products to customers in Germany who are not VAT-registered (e.g. private persons, registered doctors) have to monitor their sales.
If the value of such a vendors distance sales between January 1st and December 31st as well as in the previous year is below the threshold of EUR 100,000.00 the vendor can choose in which country the VAT taxation should take place. He can opt for VAT taxation in the country the company is residing or in the country he is selling (e.g. Germany). If he opts for the latter than he has to take into account that, first, he has to declare his decision to the appropriate authority, and, second, he will be bond to this decision for two calendar years. The potential benefit depends on the VAT amount to be paid by the customer. This benefit emerges, if the merchants domestic VAT-percentage is higher than the VAT-percentage of the country the customer is residing.
If the distance sales exceed this threshold than the VAT taxation of the whole amount will instead be subjected to the German VAT taxation system.
7. Our services for online vendors: tax registration, tax certificate and more
7.1. Tax registration in Germany at the local tax office
First of all, you have to register your company at the appropriate local German tax office as an online seller. For each country, there are different information and documents requested by the tax office.
If you like to contract us, you will receive a questionnaire to be filled and an exact list of documents that we will need for the tax registration of your company.
7.2 Application for the VAT tax certificate
Parallel to the registration of your company at the local tax office in Germany, we will apply for the tax clearance certificate according to § 22f UStG.
7.3. Fulfillment of the German tax obligations
Following the tax registration of your company, you have to fulfill the German tax obligations, i.e. you will have to declare your monthly sales to the tax office according to German law.
If you wish to contract us in order to prepare the monthly declarations, we would require a report concerning your monthly sales in Germany, based on each trading platform you will be using. The report will have to be send until the third day of the following month. For example: If you have to declare your sales for February, we would like you to send us the sales-report until March 3rd.
7.4. Serving you as your official Authorized Domestic Agent
Merchants affected by German VAT law regulations who are not domiciled in Germany, the EU, or the EEA must appoint an Authorized Domestic Agent. If this requirement is not met, the German tax office will not issue a tax clearance certificate. In consequence, Amazon, eBay, or any other online trading platform will stop cooperating with you unless you meet the requirements.
We can offer to serve you as your Authorized Domestic Agent. As such, we would be the address for official mails. In addition, we would be the first contact partner for the German tax office.
7.5. Supporting you to submit the monthly advance VAT return
Like any other traders, online sellers have to submit a monthly tax declaration. If the tax liability is less than EUR 7.500 in your first financial year and thereafter, the tax office can allow the sales VAT to be declared quarterly. If the tax liability is less than EUR 1.000 in your first financial year and thereafter, the tax office can allow the sales VAT to be declared once per year.
Not complying with this scheme will result in a notification of your online trading platform and, thus, immediate termination of your access to the market. The same applies to any case of belated payment of your tax liabilities.
As your tax firm, we would support you in any regard concerning your business, especially tax affairs.
7.6. What does our service cost?
-> Tax registration in Germany at the local tax office
-> Appliance for the tax clearance certificate,
Fee: EUR 749.90 for both (once)
-> Fulfillment of the German tax obligations
Fee depends on the yearly revenue:
0,00 100,000.00 EUR 125.00
100,000.01 250,000.00 EUR 185.00
250,000.01 500,000.00 EUR 431.00
500,000.01 1,000,000.00 EUR 731.00
> 1,000,000.00 EUR 1,231.00
Fees per month
-> Serving you as your official Authorized Domestic Agent
All fees excluding VAT.
German tax consultans for Amazon sellers and other e-commerce
Our tax consultants and lawyers are specialists concerning the taxation of online business fields. Our clients value our know-how for example in the following areas:
- organising your tax-registration at the responsible tax office in Germany
- application for the German tax certificate and the tax-ID
- we can be your tax reprensentative in Germany (receiving and forwarding mail by the German tax authorities)
- fulfilling routine tax advise service
- digital accounting: DATEV Unternehmen Online
- preparation of financial statements and filing tax returns
- routine advise regarding corporate tax law
- English speaking tax consultants
- preparation of elaborate business contracts by our lawyers
Our tax consultans and lawyers in Cologne and Bonn are happy to provide you with personal advise. In addition, we advice all over Germany by telephone call or viedo conferences.[/vc_cta]
German speaker on tax conferences for the new „Amazon & Ebay Law“
We regularly lecture other german tax consulation and explain the new German VAT legislation to them. Our presentaton (in German) can be downloaded here:
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