This article is the second part of our Ultimate VAT guide for selling through online marketplace in Germany – Part 1

Read our Ultimate VAT guide in Chinese version:

德国增值税(VAT)注册申报大全:中国跨境电商必看!

 

VAT number registration in Germany

Application for German VAT number

Application for German VAT number can be done in online or written forms

  • Online application: you can register a VAT number by submitting relevant information on the website of the German Federal Central Tax Office (Bundeszentralamt für Steuern)

 

  • Written application: it can be submitted to the German Federal Central Tax Office (Bundeszentralamt für Steuern) in written form. The Federal Central Tax Office does not indicate a needed time for the application process, but according to our previous experience, the process takes from 2 to 6 weeks.

 

  • Newly established company in Germany: at the beginning of the company’s establishment, you can directly apply to the relevant tax authorities for the VAT identification number while registering tax. The tax department will provide a tax registration questionnaire at the beginning of the company’s establishment, in which the company can check the options related to the VAT number. This application will be submitted to the Federal Central Tax Office along with the required VAT registration information.

 

The materials needed to apply for the German VAT identification number (Umsatzsteuer-ID-Nummer):

  • Business license and its German translation
  • Articles of Association and its German translations
  • Identity document of the legal representative of the company
  • PoA of the tax accountant
  • Signed application form
  • Bank account information for operations in Germany
  • The main information about the company’s legal representative: name, address, contact number, contact email address, and turnover for the first business year
  • Amazon store information, and please indicate when it was opened
  • Information of the warehouse in Germany (warehouse address, contract period and warehouse contract, etc.)
  • If there is no warehouse in Germany, you will need to provide a local representative address (Ecovis Beijing can provide you with a local agent address)

Monthly VAT return filing:

Is there a monthly VAT pre-declaration (Umsatzsteuervoranmeldung)?

The obligation to submit VAT pre-declaration is determined by the company’s last year’s VAT payment:

Monthly submission: newly registered company needs to carry out monthly VAT pre-declaration in the first two years; or company established more than two years which previous year’s VAT payment exceeded €7,500.

Submitted quarterly: if the company’s VAT payment was between €1,000 and €7,500 in the previous year. The deadline for VAT pre-declaration for the current month or quarter is 10th of the following month. At the end of the year, the company also needs to make an annual VAT declaration, which needs to be submitted before May 31 of the following year.

How to file VAT returns?

To levy a VAT, the first step is to register for VAT and get a VAT ID number. After registering the VAT number, companies need to issue their invoices in accordance with the German VAT invoice format. The company must charge a VAT on the goods or services it sells and indicate this VAT on the VAT invoice.

The correctly issued invoice contains the following:

  • The full name and address of the company providing the goods or services
  • The full name and address of the recipient of the goods or services
  • Invoice issue date
  • Tax number of the company providing the goods or services
  • If the recipient is another EU country, a VAT identification number (Ust-ID-Nr) should be provided
  • Continuous invoice number
  • The quantity and type of goods offered or the scope and type of service
  • Time of providing with product or service (if it is contrary to the time of invoicing)
  • Net price of product or service (Nettoentgelt)
  • VAT rate (19% or 7%)
  • Taxable amount or indication of goods and services which are tax-free
  • If there is a discount, it needs to be marked on the invoice in advance.

* It is worth noting that the most part of goods sold in Germany applies to a 19% tax rate, where the tax rate for specific commodities is 7%. If you are not sure which VAT rate applies to your goods, please contact Ecovis Beijing.

VAT is a turnover tax that is borne by individual consumers. The value-added tax (Vorsteuer) imposed on consumers paid to the tax bureau can be deducted from the value-added tax (output tax) paid by the company for the purchase of goods or services during the course of business (Vorsteuerabzug).Please consult Ecovis Beijing to find out which companies’ purchases and costs can be deducted for VAT.

The amount of VAT that should be paid to the tax bureau is the net value of the input tax that can be refunded for the output tax! If the output tax is less than the input tax at the time of filing, there will be a tax credit, which can be refunded from the tax bureau.

 

Cancellation of VAT number

If the company decides to suspend or stop its business in Germany, it may choose to keep the tax number or to cancel it.

 

EORI registration

What is the EORI number?

The EORI (Economic Operators’ Registration and Identification System) is an EU customs administration that is used by companies or individuals to conduct clear registration and identification systems. The EORI number can be registered in any EU country and is applicable throughout the European Union. The entities obtain the EORI number through the customs declaration of the place where the VAT number is registered and becomes an effective and legal import and export entity. This entity can use the number to communicate with any EU customs authority and the country’s customs it is operating in. For example, import and export declaration.

Why register the EORI number?

The companies need to provide the customs with the EORI number before the goods arrive at any customs in the EU country or leave the customs. Companies importing from non-EU countries also need to provide EORI numbers when making declarations to EU customs, even when companies or individuals need to import machinery, equipment, samples, office supplies and other items from countries outside the EU. If the company or individual does not usually engage in import and export business, the EORI number is still required. It is also necessary for EU customs’ information exchange on goods flow between them.

The EORI number is also required to apply for an export license from the Federal Office for Economic Affairs and Export Control BAFA. For the usage of the Electronic Customs System ATLAS Export and IAA Plus, the EORI number must be provided as well.

According to EU law, only legal entities, namely individuals, legal entity and association of legal entities, can obtain the EORI number. Unincorporated entities (branch, permanent establishment) are identified in Germany by their headquarters EORI number and four-digit branch office number.

Who needs to register for the EORI number?

Economic participants whose business activities involve activities covered by customs regulations require registration of the EORI number.

The form of the EORI number begins with the abbreviation of the respective country, so Germany is DE, followed by a 15-digit combination. For example, DE 00000001234567.

When do you use the EORI number?

  • When making import and export declarations
  • When applying for an export licensing from the Federal Office for Economic Affairs and Export Control BAFA (Bundesamt für Wirtschaft und Ausfuhrkontrolle)

How to register the EORI number?

You can apply online for the EORI number online, fill in the online form and submit it as required. Since the online filling system is in German, you can contact Ecovis Beijing, and our multilingual experts can assist you with your application.

 

Intrastat (EU Internal Business Statistics Report)

What is an Intrastat report?

Intrastat is a system for collecting statistics on intra-EU transactions (goods only). If the trade turnover within the EU exceeds the annual threshold, the Intrastat report must be submitted.

Intrastat threshold

Each EU country has an Intrastat annual report’s threshold, which may be different from sales and purchase thresholds in different regions of the same country. These thresholds are much higher than the VAT registration threshold. In Germany, for example, the threshold for German Intrastat arrivals is €800,000.  The threshold for German Intrastat dispatches is €500,000. That means that when the value of the dispatched goods exceeds 500,000 euros or the value of arrived goods exceeds 800,000 euros, the Intrastat declaration must be submitted.

The purpose of the Intrastat Report 

The Intrastat declaration fills the gap left by the 1993 customs report on the withdrawal of goods within the EU. It enables the government and the EU to track trade transactions between countries for statistics. It is also often used for checking of potential VAT fraud. Like the European Sales Listing (ESL), it differs from the VAT reporting process but is based on the same data.

Materials required for Intrastat Declaration

  • Detailed information about sales and purchases
  • Information of each transaction
  • Product description
  • Product code
  • Quantity and value of goods
  • Delivery deadline
  • Departure/arrival country or region (country code)
  • Proof of all shipping costs

When do you submit an Intrastat report?

The Intrastat report within the EU should be done once a month. The declaration is usually carried out together with the VAT return and sent by the relevant national statistical office.

 

EC Sales List (ESL)

What is ESL?

The ESL (EC Sales List) is an additional report for companies selling across borders in the EU. The report provides detailed information on sales or merchandise transfers and services to other VAT registered companies in other EU countries.

The purpose of ESL 

Tax authorities across Europe use ESL to check whether parties during a cross-border transaction are correctly and fully claiming VAT.

Required information for ESL

  • Name of the EU customer
  • VAT number of the EU customer
  • Country code of the EU customer
  • Sales value during the reporting period

How to submit ESL?

ESL is usually filled out with a VAT declaration, and the frequency of declaration varies from country to country, so it is monthly or quarterly. In Germany, for example, an annual declaration is made once a month (if the previous year’s annual turnover is 1000 EUR – 7500 EUR, it can be declared quarterly). Applications are mostly electronic now.

Double Taxation Treaty

Ecovis Beijing’s German VAT Compliance Service

German VAT registration/cancellation

  • Including all procedures for the issuance of local VAT numbers

EORI registration

  • If you need a local service agent, Ecovis Beijing can help you to contact the customs department, submit an EORI application form, assist you throughout the process, and finally get an EORI number

VAT monthly and annual declaration

  • Ecovis Beijing provides you with a list of documents or templates for your declaration
  • Helps you to fill out the required documents, check for compliance, and provide you with reasonable reporting advice
  • Helps you to verify the compliance of invoices and transactions through our own system
  • Ensures compliance with local financial law VAT clauses
  • Guarantees that your business complies with local regulations regarding invoices, VAT processing, accounting procedures and VAT filing and payment
  • Represents your company in negotiations with the finance and tax authorities
  • Handles local VAT office inquiries and tax inspections
  • Provides you with professional cross-border VAT advice
  • Assists you in VAT audits and negotiations with tax authorities
  • Assists with more complex declarations

Intrastat (EU internal business statistics report)

  • Ecovis Beijing checks the threshold to ensure that you submit all necessary reports and fulfill compliance obligations
  • Submits a declaration form to all required EU member states
  • Analyzes your supply chain to determine where you need to make a declaration
  • Provides recommendations for product codes to ensure compliance with regulations
  • Assists in more complex filings (for example, different thresholds between member states or concerning international trade terms (Incoterms) and statistics)

EC Sales List (ESL)

  • Ecovis Beijing helps you to fill out the EU sales list and submit it electronically to the customs
  • Helps you to verify the compliance of invoices and transactions through our own system
  • Checks your accounting records
  • Verifies your customer’s VAT number (based on country code)
  • Calculates the statistics
  • If you have a request, we can provide additional data

VAT representation

  • Ecovis Beijing ensures compliance with local financial law VAT clauses
  • Ensures that your business complies with local regulations regarding invoices, VAT processing, accounting procedures and VAT filing and payment
  • Handles local VAT office inquiries and tax inspections

VAT advisory

If you are interested in investing in Germany, Ecovis Beijing welcomes you to communicate with us. We will use our sincere enthusiasm and professional knowledge to develop a practical business plan for your business ideas.

If you have any questions or inquiries, please feel free to contact us directly via: heidelberg@ecovis-beijing.com or Phone: +49 6221 9985 639.

If you are interested about the VAT and want to learn more about it, we recommend you to read the following articles:

Is Germany’s strict inspection on the VAT reasonable? How should the enterprises respond to that?

If you want to learn more about the tax services that we provide for our clients, you can simply follow this link:

Tax Services in Germany

Richard Hoffmann

Richard Hoffmann is a partner at Ecovis Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining Ecovis. In addition to being a member of the board of Ecovis International, he is Supervisor for the China business of several respected German companies and shares his extensive knowledge to students by teaching commercial law in China at SRH Hochschule Heidelberg. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact: richard.hoffmann@ecovis-beijing.com

Ecovis Beijing

Ecovis Beijing is the trusted tax and legal advisor to several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up for our Newsletter, give us a call +86 10-65616609 or +49 6221 9985 639 or contact us directly via heidelberg@ecovis-beijing.com.