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Germany

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Germany has a value-added tax (VAT) system known as "Umsatzsteuer '' with a standard rate of 19% and reduced rates of 7% and 5% for certain goods and services.

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Fiscal representation in Germany

The fiscal representative is responsible for ensuring that the non-resident company complies with all German VAT rules and regulations, including the submission of VAT returns and payment of VAT, as well as representing the non-resident company in any tax-related matters or disputes.

In general, a fiscal representative is required when a non-resident company has no permanent establishment or fixed place of business in Germany.

German VAT reverse charge

In Germany, Article 196 of the VAT Directive (Directive 2006/112/EC) pertains to the reverse charge mechanism for certain services provided by a non-resident supplier to a VAT-registered business in another EU member state. This article allows for the reverse charge to be applied, shifting the responsibility for reporting and paying the VAT from the supplier to the recipient of the services.

- German reverse charge on B2B Services

Scope of Application: The reverse charge on B2B services generally applies when services are provided by a non-resident supplier to a VAT-registered business in Germany.

-Domestic reverse charge is mandatory when non-established companies sell goods B2B in Germany

When a non-established company, meaning a company without a fixed establishment or permanent establishment in Germany, sells goods to another VAT-registered business in Germany, the domestic reverse charge mechanism may apply.

Frequency of German VAT returns

  • Monthly Returns: Turnover above 7,500 per year.

  • Quarterly Returns: Turnover between €1,000 and €7,500 per year.

  • Annual Returns: Turnover less than 1,000

  • An annual return is required in addition to monthly or quarterly returns

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

  • VAT Registration: Businesses meeting the threshold for VAT registration must register with the German tax authorities to obtain a VAT number. This enables them to charge, collect, and remit VAT on their taxable supplies.

  • VAT Rates and Invoicing: Businesses must correctly apply the appropriate VAT rates to their goods or services and issue valid VAT invoices to customers. Invoices should contain specific information required by German VAT regulations.

  • VAT Reporting and Returns: Businesses are responsible for submitting regular VAT returns to the tax authorities, reporting their VAT liabilities and input tax credits. Returns must be filed within the prescribed deadlines and reflect accurate calculations.

  • Intrastat Reporting: If a business exceeds the threshold for intra-EU trade, they may be required to submit regular Intrastat returns. Intrastat reports provide statistical information on the movement of goods between EU member states.

  • Reverse Charge Mechanism: Businesses should understand and apply the reverse charge mechanism correctly in specific situations where the recipient is responsible for reporting and paying the VAT instead of the supplier.

  • VAT Compliance Documentation: It is important to maintain proper records and documentation to support VAT transactions, including invoices, VAT certificates, and relevant business documents.

  • Compliance with VAT Rules and Regulations: Businesses should stay updated with any changes or updates to German VAT legislation and ensure compliance with all applicable rules and regulations.

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