To be able to carry out its activity in the European Union as a company, it is mandatory to obtain an intra-community VAT number in the country of destination of the taxable transactions.
A foreign company carrying out taxable transactions in Germany must be identifiable, i.e. register with the German tax authorities in order to obtain an intra-Community VAT number and must declare the latter, even in the absence of turnover.
Transactions considered taxable in Germany:
The tax representative of the foreign company takes care of the administrative formalities and tax declaration of its taxable transactions in Germany :
The standard VAT rate in Germany is 19%. The reduced rate of 7% applies to certain expenses (tickets to sporting events, social works, art and collectibles, wood for industrial use)
For B2C activities, the threshold for distance selling is set at €10,000. As in all European countries, VAT must be declared even in the absence of turnover from the moment you are registered.
VAT registration in Germany is required for the following taxable transactions:
The lack of registration is not to be taken lightly : In addition to no longer being able to recover VAT, the German tax authorities impose heavy penalties (questioning of exemptions, additional taxes, penalties, interest on late payments, etc.).
For any intra-Community transaction of goods or services to a customer from an EU country, the company via its tax representative must send to the Federal Central Tax Office (Bundeszentralamt für Steuern – BZSt) an EC Sales List (ESL) which contains the details of the customers, the value of the goods or services as well as the country code of the customers.
This information allows the tax authorities to ensure that activities are correctly declared and that intra-Community VAT rules are respected.
The ESL declaration is mandatory from the 1st euro and must be sent to the local tax administration at the same time as the VAT return.
Failure to submit ESL returns deprives the undertaking of the exemption applicable to intra-Community supplies.
Intrastat declarations are also compulsory. In Germany, they are controlled by the statistical authority Destatis. They are submitted monthly, on the 10th working day of the month following the reporting period.
In Germany, the IDEV (Internet Datenerhebung im Statistischen Verbund) portal is the favorite method to send the declaration. The Umsatzsteuer-Identifikationsnummer (local VAT number) is required to make the deposit.
German Intrastat declarations must be submitted as soon as the value of intra-Community transactions reaches the threshold set by the Intrastat Customs Code:
Failure to file returns may result in penalties. Setting up a Tax Representation in Germany grant you the respect of local rules.
Cosmopolite is present in France, Belgium and the Netherlands, and has sales offices in the United Kingdom and the United States. Cosmopolite serves more than 300 of the world’s leading clients in 29 countries.