Have you newly founded your company and are you not a small business owner?
In the first two years, you are obliged to submit your sales and input tax amounts monthly in the form of an authenticated advance VAT return to your tax office. Depending on the expected VAT to be paid in the first year or the previous year’s VAT for the second year, the advance VAT return is submitted quarterly (annual VAT less than EUR 7,500) or monthly (annual VAT more than EUR 7,500). In addition, you are obliged to submit a so-called annual VAT return at the end of the year. This rule is also valid for foreign companies VAT registered in Germany.
You start your business activity on 8 February 2021. The turnover expected for 2021 will probably result in a turnover tax of EUR 5,000. Thus, you are obliged to electronically transmit your turnover to the tax authorities for the first time for the 1st quarter of 2021. In addition, you will submit an annual VAT return at the end of 2021.
From 2022 onwards, the amount of your actual annual VAT liability for the previous year will determine whether you will have to submit your advance VAT returns monthly, quarterly or (from the third year onwards) only one annual VAT return (for the relevant turnover limits, please refer to the explanations on the point “By when do I have to submit the advance VAT returns to the tax authorities?)
As an entrepreneur, you make advance payments on your annual turnover tax through the advance turnover tax returns. You have until the tenth day after the end of each advance return period to authentically submit your advance return to your tax office.
There is no threshold like in UK for VAT exemption when starting with sales, foreign companies must always declare and pay VAT from the first article sold as the local ones, in case of foreign companies based outside the EU, Amazon is the deemed supplier for VAT, so it does never arrived to the seller´s wallet, before being paid to the German Tax office. This happens in most of the EU countries, so when you start an activity selling products, VAT rate should applied and after paid to the tax office, since the first article sold in your company’s activity.
By when do I have to submit the advance VAT returns to the tax authorities?
you will have to submit your advance VAT returns monthly, quarterly or (from the third year onwards) only one annual VAT return.
Pursuant to § 18 para. 2 sentence 1 UStG, the standard advance return period is the calendar quarter. The advance return for VAT must therefore be submitted quarterly.
However, the calendar month is decisive
- in the case of company foundations for the year of foundation and the following year after foundation,
- if you choose it yourself because of input tax credits or
- if the threshold for filing monthly advance returns is exceeded. These monthly thresholds have changed as of 2009.
Timing of the submission depends on the VAT payment burden of the previous year
- In the year of incorporation and the following year: Always monthly advance returns.
Tax payable in the previous year not more than EUR 1,000:
No advance returns, only annual return.
Tax payable in the previous year not more than EUR 7,500:
Quarterly advance returns.
Tax payable in the previous year more than EUR 7,500:
Monthly advance returns.
VAT exemptions in Germany for entrepreneurs.
Is there any in Germany for entrepreneurs? Is there any Threshold in Germany for freelancers? What about the Einzelunternehmer in Germany? Can I get VAT exemption in Germany being freelancer or Einzelunternehmer? – Yes of course! This is possible, there is a Threshold in Germany for freelancers.
Only sole traders who have earned less than 17,500 euros in turnover in the previous year and are expected to earn less than 50,000 euros in the current year may make use of the “small business regulation”, which is called in Germany as “Kleinunternehmerreglung”, but only if you are a “Einzelunternehmer” or “Kleinunternehmer”. Having such a condition in Germany (“Einzelunternehmer” or “Kleinunternehmer”) means become freelancer in Germany.
Do you want to become freelancer in Germany?
become freelancer in Germany means that you have LEGAL RESIDENCY and PERMIT RESIDENCY in Germany that allows you to live there, a permanent home address and you’re based in Germany. There are some types of legal residency in Germany that does not allow automatically work or become a freelancer in Germany, like for example the “Student VISA”.
If you want to get the Einzelunternehmer for Germany, you’ll have to submit an application to the Ausländerbehörde (Department for foreigners), where your VISA depends on.
How can I sell without VAT on Amazon, I already became freelancer in Germany.
became freelancer in Germany and creating a seller account for selling without VAT on Amazon seems not possible nowadays. Amazon does not accept this rule. If you want to continue selling like that on Amazon, you should renounce to the “Kleinunternehmerreglung” (selling without VAT on Amazon) because Amazon is not accepting this VAT rule exception. In that case, if you want to sell on Amazon.de, there is no threshold like in UK for VAT exemption when starting with sales, everybody in Amazon.de Germany must always declare and pay VAT from the first article sold.
If you want to profit from the “Kleinunternehmerreglung”?
If you want to profit from the “Kleinunternehmerreglung” , you can set your own online store.
If you know want to know more about German VAT registration from a UK company , please read this article , Link.
Hopefully this information provided is helpful for you. If you have any question/need more specifications regarding the above mentioned list, you can contact me to: +49 1520 8381499 or Email to Erica@taxandlawspain.com