How the German VAT system works for foreign retailers

Foreign traders who sell goods or services in Germany must register with the German value added tax system (sales tax) familiarize yourself with it. Here are the most important points you need to know as an international trader:

1. who has to register for German VAT?

You must choose the Register sales tax (value added tax, VAT) in Germanyif:

-You sell goods from abroad to Germany (e.g. via e-commerce or dropshipping).
-You store goods in Germany (e.g. in an Amazon FBA warehouse or another fulfillment center).
–You achieve an annual turnover of over € 10,000 with deliveries to Germany (EU-wide delivery threshold).
-You offer services to private customers (B2C) in Germanywhich are subject to tax there.

Attention:

• Within the EU there is a Uniform VAT regulations (OSS procedure) for cross-border sales.
• Companies outside the EU must register directly in Germany or use a Tax representative commission.

2. how high is the value added tax in Germany?

• Rule set: 19 % → Applies to most goods and services.
• Reduced rate: 7 % → Applies to certain products, e.g:
  • Food (except drinks and restaurant services).
  • Books, newspapers, magazines.
  • Public transportation, works of art.

Example:
You sell a smartphone to Germany for 500 €.
➝ The German customer pays 595 € (500 € + 19 % VAT).
➝ You must use the 95 € VAT to the German tax authorities.

3. apply for a sales tax identification number (VAT ID)

• Foreign retailers must register with the German tax office and a Value added tax identification number (VAT ID) received.
• Applications are submitted via the Federal Central Tax Office (BZSt).
• If you are already registered in an EU country, you can register in the OSS procedure (One-Stop-Shop) registrationso as not to be registered separately in each EU country.

4. tax reporting obligations for foreign traders

As soon as you are registered for German VAT, you must:

–Regular advance VAT returns (monthly or quarterly).
–Annual sales tax return submit.
-If you are selling via a German platform (e.g. Amazon, eBay), a Certificate according to § 22f UStG submit.

Important: If you do not report or pay your VAT on time, you may face Penalties and default interest.

5. what rules apply to online retail (e-commerce & dropshipping)?

• If you use platforms such as Amazon, eBay or Shopify you must comply with German tax law.
• Since 2021, a EU-wide delivery threshold of €10,000 (applies to all EU countries together, not per country).
• If you have Amazon FBA (warehouse in Germany), you must register for VAT directly in Germany.

Example: Amazon FBA seller

• You have your warehouse in Poland, but sell to German customers.
• As the goods are shipped from Germany, you must pay German sales tax.

6. import from third countries (China, USA etc.): Note import sales tax

• When imported into Germany Import turnover tax (EUSt) of 19 % or 7 % to.
• You can use the Claiming EU VAT as input taxif you are liable for VAT.
• If you Dropshipping from China or the USA your customer in Germany is often the importer.

7. exemption from VAT: small business regulation & OSS procedure

• Small business regulationApplies not for foreign dealersbut only for companies based in Germany.
• OSS procedure (One-Stop-Shop):
  • Allows you to All EU sales tax centrally in your home country to report.
  • Applies to cross-border sales within the EU (not for warehouses in Germany).

8 What are the penalties for breaches of the tax obligation?

• Late or missing registration → Penalties of up to €25,000.
• Sales tax not paid → Tax evasion with fines or even prison sentences.
• Missing tax certificate (§ 22f UStG) for marketplaces → Blocking of the merchant account.

Tip: Many retailers hire a tax consultant or use tax tools such as Hellotax, Taxdoo or Avalarato manage their VAT correctly.