Germany VAT

Germany introduced value added tax (VAT) in 1968. German rules for VAT are based on European Union (EU) rules, which Germany has transposed into its VAT act. VAT is administered by the German Ministry of Finance.

Foreign companies, or ‘non-resident’ traders, providing goods and services in Germany to local businesses or consumers may have to register their business for German VAT. They will then have to follow German VAT compliance rules, including invoicing and VAT rates, and pay any VAT due to the German authorities.

There is no VAT threshold for foreign businesses operating in Germany. If businesses are VAT/GST/tax registered in their home nation, the German VAT registration threshold is nil. For distance sellers — EU VAT-registered businesses selling goods or services over the internet — the VAT registration threshold is €100,000 per annum, according to the German VAT Act.

There are a number of trading situations that typically require a foreign trader to register with the German tax authorities:

• Importing goods into Germany from another country, either from within or outside the EU

• Moving goods between Germany and another EU member state (intra-community supplies), either as sales (dispatches) or purchases (arrivals)

• Buying and selling goods in Germany

• Selling goods over the internet to German consumers, subject to the German distance selling VAT registration threshold

• Goods held in consignment stock

• Holding live exhibitions, events, or training in Germany

• If a company is otherwise a non-VAT trader, but is receiving services in Germany under the reverse charge rule

• The self supply of goods

Applications for a German VAT identification number must be submitted to the appropriate German tax office. The location of the tax office depends on where in the EU the applying business is based. Non-EU companies wishing to register must apply to the Berlin tax office.

The German tax offices will require details of the applicant, which typically includes extracts from the articles of association of the company. The tax office may ask additional questions if the company has a limited trading history and/or is dealing in goods susceptible to VAT fraud. Typical requests include but are not limited to:

• VAT certificate from the business’s home nation
• Company registration certificate
• Company certificate confirming the current company directors
• An extract from the company’s national trade register
• Proof of planned business in the form or contracts or invoices

Some of the requested documents may need to be translated into German by a certified translator. Once the requested documents have been submitted and verified by the German tax authority, and the registration process is complete, it could take up to 11 weeks for a business to receive its German VAT identification number.

Businesses can submit their application for a VAT identification number online; however, the process is available in German only.

A small range of groups and entities do not require a VAT identification number in Germany. These are:

• Freelancers and self-employed people who provide and obtain services within Germany only
• Freelancers and self-employed people who trade across borders with private individuals only
• Small business owners who use the exemption for small businesses

There may be further exemptions from the requirement to register for VAT in Germany relating to the VAT Reverse Charge.