Dropshippers, how to get VAT refund.
- General information: VAT In Germany: 19% rate. So if you import a product for 40 €, to be paid in the provider will be: 7,60€ (If the provider comes from Germany).
VAT deduction is very simple: out and ongoing VAT, like you said. If I sell online in Germany or in Europe ( watch for 40 price+ 7,60€ VAT), I sell it in Germany or in Europe as B2C for 100 € price+ 19,00 € VAT. I pay the provider VAT, after I sell the products with VAT, so I´ll pay after tax deductions to the tax office 19,00-7,60€ =11,40€ VAT per sold watch.
Dropshippers: Same as in the example of custom clearance, but to deduct, the regular invoice from the company where the order takes place.
What happens when I order from another EU country?
Example: The Netherlands, and I got an invoice with 21% VAt added.
This shouldn’t be the result, so it means that your dropshipping is not competitive and you’re paying double VAT.
How to avoid this? How to get VAT refund of all dropshipping invoices?
you should check also if you meet the requirements for getting VAT exemption while making B2B purchases from one EU country to another.
You should, from the beginning,
1st: have a business registered account to order any dropshipped article.
2nd: this company under the business account registered, should have German VAT Nr. so every product bought with VAT number starting with DE will contain refundable VAT.
3rd, every product bought with VAT number starting with any other letters than DE will not contain any VAT due to the “reverse chage”.
If you want to find out more about reverse charge process VAT within Europe and how it affect the German sales and VAT report, please read the following article.
Article 1: How VAT
Article 2: B2B sales or B2C sales? VAT or without VAT? Transaction VAT Germany, VAT exemption, reverse charge in Germany or other country in Europe.