German VAT compliance
- What Global Trade can help you with ?

• VAT Registration: Businesses engaged in taxable transactions in Germany are generally required to register for VAT. This involves obtaining a VAT identification number from the German tax authorities. Registration can be done online or through a physical application.

• VAT Rates and Invoicing: Familiarize yourself with the different VAT rates applicable to goods and services in Germany. Ensure that you charge the correct VAT rate on your sales and issue proper VAT invoices to your customers. The invoices must contain specific information required by the German tax authorities, including your VAT identification number.

• VAT Returns and Payments: Registered businesses must file periodic VAT returns, usually on a monthly or quarterly basis, reporting their VAT transactions. The VAT return should include both output VAT (VAT charged on sales) and input VAT (VAT paid on purchases). The difference between output VAT and input VAT determines the VAT liability or refund. VAT payments are typically due with the VAT return.

• Intrastat Declarations: If your business is involved in intra-Community acquisitions or supplies with other EU member states, you may have to submit Intrastat declarations. These declarations provide statistical information on the movement of goods between EU countries and help monitor trade within the EU.

• Recordkeeping: Maintain proper records of your VAT transactions, including invoices, receipts, import/export documentation, and any other relevant documents. These records should be kept for at least ten years.

• VAT Compliance Checks: Be prepared for VAT compliance checks by the German tax authorities. They may conduct periodic audits or inspections to verify the accuracy and completeness of your VAT reporting and transactions. Ensure that your records are organized and easily accessible for such checks.

• VAT Refunds: If you are entitled to a VAT refund, follow the procedures outlined by the German tax authorities to claim the refund. This typically involves submitting a VAT refund application with supporting documentation.

• Electronic Reporting: Germany has implemented electronic reporting requirements for VAT, such as the mandatory use of the "ELSTER" system for VAT filings. Ensure that you comply with the electronic reporting obligations and use the designated platforms for VAT submissions.

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VAT registration in Germany

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When do you need a German VAT number?

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1. Domestic supply of goods not reverse charged: If you supply goods located in Germany and the supply is not subject to reverse charge, you are required to register for VAT in Germany.

2. Supply of services not reverse charged: If you are a foreign business providing services on which German VAT is due, you must register for VAT in Germany. This applies when providing services to German businesses (B2B transactions) under the general rule.

3. Export: If you export goods to a non-EU country, you need a German VAT number before the export takes place.

4. Intra-Community acquisition: If you acquire goods from another EU Member State and all conditions for intra-Community movements are met, your business is obligated to register for VAT in Germany.

5. Intra-Community supply: If you supply goods to another EU Member State, it is considered a taxable transaction that requires you to register for VAT in Germany.

6. Distance sales: If you engage in distance sales (e.g., online sales) to German customers and you have not joined the One-Stop-Shop (OSS) scheme, you would need to register for VAT in Germany. Distance sales typically apply to e-commerce businesses selling goods directly to consumers

Do you need a fiscal representative in Germany?

If your business is based outside of the EU and you are required to register for VAT in Germany, you may need to appoint a fiscal representative.

Global Trade Business provides a comprehensive suite of international VAT registration and returns services, which includes the provision of a fiscal representative to ensure compliance with tax obligations in foreign jurisdictions.

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German reverse charge

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In Germany, the reverse charge mechanism applies to certain supplies of goods and services where the VAT liability shifts from the supplier to the customer. Under the reverse charge mechanism, the recipient of the goods or services is responsible for reporting and paying the VAT due to the German tax authorities, rather than the supplier.

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The reverse charge mechanism applies to various types of transactions in Germany, including:

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1. Intra-community acquisitions of goods: When a German VAT-registered business purchases goods from another EU country and imports them into Germany, the recipient is responsible for reporting and paying the VAT due on the transaction.

2. Services provided by non-established businesses: When a non-established business provides services to a German VAT-registered business, the recipient is responsible for reporting and paying the VAT due on the transaction.

3. Certain domestic transactions: The reverse charge mechanism may also apply to certain domestic transactions, such as the supply of goods subject to excise duty.

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When a supplier established outside of Germany offers services or sells goods with installation to a VAT-registered entity, the domestic reverse charge mechanism is applied. The VAT registration status of the supplier does not affect the application of this mechanism.

German consignment and call-off stock

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In Germany, consignment stock and call-off stock arrangements refer to specific inventory management and VAT treatment scenarios.

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In a consignment stock arrangement, goods are stored by a supplier in a warehouse belonging to the customer in Germany. The ownership of the goods remains with the supplier until they are consumed or sold by the customer. VAT is only applied when the goods are taken out of the consignment stock and used by the customer.

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On the other hand, call-off stock occurs when a supplier transfers goods to a warehouse or location in Germany that is under the control of the customer. The transfer is made in anticipation of potential future sales. The customer only becomes liable for VAT when they actually take possession of the goods from the call-off stock and use or sell them.

Both consignment stock and call-off stock arrangements have specific VAT implications and require careful consideration to ensure compliance with German tax regulations.

German intrastat/ EC sales list

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German Intrastat refers to the statistical system for the collection, processing, and dissemination of data on the trade in goods between Germany and other European Union (EU) member states. Intrastat is used to monitor the movement of goods within the EU single market and is an essential tool for compiling trade statistics.

Businesses involved in intra-EU trade are required to submit Intrastat declarations to the national statistical authorities, detailing their transactions with other EU member states. These declarations help in the calculation of trade balances and the monitoring of trade flows within the EU.

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Thresholds:

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In Germany, businesses are required to submit Intrastat declarations if their intra-EU trade volume exceeds certain thresholds for arrivals (goods coming into Germany) and dispatches (goods leaving Germany).

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Arrivals : 800,000€

Dispatches :500,000€

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When should German Intrastat be filed?

Intrastat declarations for goods traded within the European Union are usually submitted on a monthly basis.

German EC Sales list

The German EC Sales List is a report that VAT-registered businesses in Germany use to report sales of goods and services to other VAT-registered businesses in different EU member states.

When should the German EC sales list be filed?

The German EC Sales List is generally submitted on a quarterly basis. This means that businesses are required to report their cross-border sales to VAT-registered businesses in other EU member states every three months.

The exact deadline may vary, but it is typically around the 25th day of the month following the end of the quarter.