International VAT and VAT reports
International VAT and VAT reports
Does your German company supply customers abroad? Do you provide services for customers abroad? Or is your company just starting up and you are planning to serve customers abroad? Domestic, other EU countries or third countries? Which country does Switzerland belong to? Entrepreneur or private individual? 13b?, reverse charge, intra-Community transfers, entry certificate and so on need to be known. If you are already active across borders, you will certainly know how complicated international VAT law is and how many regulations there are to observe.
Imagine the following situation: You are an American entrepreneur who wants to set up a subsidiary in Germany for distribution purposes. The American parent company is to invoice the goods to the German subsidiary, which in turn is to sell them on to its customers in Germany and other European countries. However, the goods are not manufactured in the USA, but in China and delivered directly from the Chinese factory to the end customers in Germany, Italy or Norway.
What does this mean for the German subsidiary in terms of VAT? What should the invoices look like? And how can they prove the actual delivery?
VAT registration in Germany, especially for sales via internet marketplaces
The special regulation One-Stop-Shop, EU regulation has replaced the predecessor procedure Mini-One-Stop-Shop since July 1, 2021.
Registered companies were able to use the previous Mini-One-Stop-Shop procedure for transactions that were carried out until June 30, 2021.
These businesses do not need to re-register for the special One-Stop-Shop, EU regulation.
Other entrepreneurs must apply to the BZSt electronically, stating their VAT identification number, in order to participate in the special OSS procedure.
We will be happy to do this for you.
As operators of internet marketplaces such as Amazon and Ebay are now responsible for the VAT of their traders, the operators must comply with a specific procedure that also affects their foreign traders. Every professional trader must apply for a certificate proving that they run a business subject to VAT in Germany. The trader must send a copy of this certificate to the operator of the marketplace. In addition, traders outside the EU must also appoint a representative based in Germany (e.g. a German tax advisor) who is authorized to receive mail from the tax authorities.
Traders from countries that do not belong to the European Union require a German tax number and a tax number certificate and have had to submit this certificate to the marketplace operator they use for their online business since March 1, 2019. This provision has applied to traders from other EU countries since October 2019. To avoid liability risks, marketplace operators can exclude traders until they present the certificate.
It may take a few weeks before you receive a tax number in Germany, so act in good time before you want to start selling in Germany via internet marketplaces.
- VAT registration to obtain the certificate.
- Act as an authorized representative to receive mail from the German tax authorities.
- Submit regular VAT returns to the tax office.
- Ongoing advice on VAT issues (see below) or preparation of VAT reports (see below) on how your company must comply with VAT rules in Germany.
- Contact for VAT audits by the German tax authorities.
Ongoing VAT advice in international business transactions - many pitfalls lurk
VAT law is complex and subject to constant change. Particularly if you have to write invoices to companies abroad or goods are delivered to a location abroad, caution is required. If you receive invoices from abroad, it is important to check whether they meet the requirements for input tax deduction. If you pay the invoice and the tax office later complains about the VAT treatment, you may be left holding the bag. We therefore recommend having the invoices checked by experts before payment. If errors are discovered, you can refuse to pay the invoice until you have received a correct invoice. You can read about some of the most common VAT errors here.
Therefore, do not wait until the tax consultant prepares the annual financial statements and also checks some business transactions for VAT plausibility, but contact us immediately and during the year if you are unsure about the VAT treatment.
However, if you set up a company or change your business strategy, it is advisable to have the following comprehensive VAT review carried out by an expert.
Fundamental review of VAT regulations upon formation or significant changes
What does such an expert opinion look like?
The expert opinion we have prepared presents the VAT treatment for the various cases (deliveries within Germany, to other EU countries and to so-called third countries). We differentiate between transactions with entrepreneurs and non-entrepreneurs. In addition, you will receive checklists from us on how the outgoing invoice should look in each case.
This means you know at a glance what requirements an invoice to an entrepreneur in France has, for example. In this case, the customer’s VAT ID number would have to be stated on the invoice, for example.
If you want to avoid liability, you must regularly check with the tax authorities whether the number is still correct.
In addition, we will inform you separately of any documentation requirements for each case. For a delivery to France, for example, you must prove that the delivery has actually been made to the customer in France by means of an entry certificate.
If required, we can explain to you when VAT is actually incurred in Germany and when it has to be paid to the tax office.
Why it is worth commissioning a VAT expert opinion
When it comes to VAT in particular, more mistakes are made than is generally assumed. It is easy to overlook the fact that no VAT has to be shown on an outgoing invoice. Or you forget one of the formalities, such as the VAT identification number of the receiving company in another EU country.
As soon as you deliver abroad, other rules may have to be observed.
With a VAT report from us, the employee who creates your invoices has a reliable guide in their hands. The error rate drops considerably.
In addition, you will always have a clear guide that even new employees can use for invoicing without any training. And you don’t have to have the VAT treatment checked again for every outgoing invoice if you have any doubts.
This saves costs and provides legal certainty.
Of course, we will be happy to update any expert opinions we have previously prepared if your company’s business processes change or you wish to serve new markets. In any case, we will keep you constantly up to date on any changes in VAT law that are relevant to you.
