Go Global - Umsatzsteuern im Ausland

Go Global - Sales taxes abroad

We'll show you how to overcome these challenges and trade successfully across borders.

 

 

Commercial trade has been undergoing a steady transformation for some years now. Away from traditional retail sales - towards virtual marketplaces. And the e-commerce business is booming! In recent years, annual sales in Germany increased to 58.5 billion euros (in 2018). That makes an annual increase of about 4 billion euros and an average growth per industry of about 11%. This is comprehensible when you consider the advantages that online retailing offers retailers: no store rent, fewer personnel costs, and no fixed opening hours.

 

20% of annual e-commerce sales in Germany are generated by international trade.

The most lucrative factor, however, is the partly unlimited reach that online commerce offers. In contrast to a brick-and-mortar store, you can determine your own potential reach online and thus trade locally, nationally and internationally. Surveys have revealed that 2/3 of all German online stores are already internationally active. Thus, 20% of the total turnover is generated with international trade. Especially in the EU, the willingness to shop internationally online is very high.

 

The willingness to engage in international trade is very high throughout the EU. For example, 90% of Italians are willing to buy goods from other EU countries. In Switzerland and Spain, the willingness is around 84%.

However, if you want to sell internationally, you have to consider several things. On the one hand, separate top-level domains, sub-domains and different language directories are required. Secondly, the sales tax regulations should not be ignored! Here B2B and B2C companies are to be differentiated strongly.

 

VAT is calculated differently for EU-wide trade between B2B and B2C.

If you sell as a B2B company to a prospective customer from the EU foreign country, no sales tax must be calculated. Only the buyer is required to pay the purchase tax. However, if you sell to consumers in other EU countries, the VAT issue is a bit more complex.

 

Sales tax is only paid once. The country in which it is charged is determined with the help of threshold amounts.

As a rule, you can decide for yourself in which country you want to calculate the sales tax. However, the choice should be well thought, as this is obligatory for a period of 2 years. In addition, each EU country has set a threshold amount. If the annual turnover of the company in the respective country exceeds this amount, you are obliged to charge the VAT in the receiving country. If the annual turnover exceeds such a certain amount, you are obliged to pay the VAT in the respective country and you need a tax number in the corresponding country. Moreover, once this amount has been exceeded, you will remain liable to pay VAT in the receiving country in subsequent years. This also applies if the company has fallen below the limit in the following year.

 

Examples of threshold amounts within the EU:

country

Threshold amount

Austria, Belgium, France, Netherlands, Spain

35.000 Euro

United Kingdom

34.400 Euro

Germany

100.000 Euro

Denmark

37.500 Euro

 

If you sell to consumers and choose taxation based on German law, this does not necessarily apply to all products. Alcohol and cigarettes, for example, are not taxed until the consumer actually makes the purchase in the country of destination.

 

KEA


The sales tax for "electronically provided services" is calculated separately as "KEA" at the Federal Central Tax Office.

Another exception describes "electronically delivered services". These exceptions include eBooks, streaming services for movies and music, downloads, and paid portals and databases. In these cases, sales tax is generally charged in the country of the service receiver. Threshold amounts do not apply here. So that the service provider does not have to account for its sales tax in each EU country individually, the "Mini-One-Stop-Shop Procedure", short MOSS, came into force on January 1, 2015. In Germany also called "Kleinste Einzige Anlaufstelle" (KEA). The KEA is attached to the Federal Central Tax Office. Service companies can be registered here. The MOSS then pays the sales tax to the respective EU country.

 

Small businesses are exempt from VAT only within Germany.

Small businesses are exempt from VAT within Germany. However, this does not apply to trade with other European countries. Since as a small business you cannot decide between settling the VAT in Germany or abroad, you are obliged to settle the VAT in the receiving country. This also applies to "electronically provided services".

 

The different tax rates per receiving country should also be taken into account in the design of your online store and thus in Shopify.

In the Shopify settings there is the possibility to set differentiated tax rates for different countries. At this point, however, we recommend checking whether additional Shopify accounts for the respective countries might be useful. Basically, the sales tax issue can be implemented wonderfully in Shopify.

 

Shopify - Umsatzsteuern im Ausland



 

Reserve Change Process


Englisch (US) For international trade beyond the EU, the "reserve change procedure" is used. Anyone who conducts international trade beyond the EU (B2B or B2C) does not have to charge VAT as a matter of principle. However, this must be documented meticulously. In addition to proof of the completed trade, the company must be able to prove that the goods were actually shipped to a country located outside the EU. It must also be explicitly stated on the corresponding invoice that the shipment is VAT-exempt. The only relevant factor is the "route of goods". If, for example, a package is ordered from Austria but delivered to Switzerland, then according to the route of goods it is a trade with a non-EU country and the order can be charged VAT-free. However, customs duties cannot be charged here, as these are calculated via the service provider such as DHL. For international trade beyond the EU, the "reserve change procedure" is used. Anyone who conducts international trade beyond the EU (B2B or B2C) does not have to charge VAT as a matter of principle. However, this must be documented meticulously. In addition to proof of the completed trade, the company must be able to prove that the goods were actually shipped to a country located outside the EU. It must also be explicitly stated on the corresponding invoice that the shipment is VAT-exempt. The only relevant factor is the "route of goods". If, for example, a package is ordered from Austria but delivered to Switzerland, then according to the route of goods it is a trade with a non-EU country and the order can be charged VAT-free. However, customs duties cannot be charged here, as these are calculated via the service provider such as DHL.

 

In general, trading with foreign customers can be simplified by the "reserve change procedure".

In the case of the "reserve change procedure", the VAT is paid by the recipient of the service instead of the service provider. In this case, both the company and the recipient require a valid VAT ID. In this case, the company invoices only the net price to the recipient. The recipient can thus pay the VAT directly in the destination country without having to contact the Federal Central Tax Office. This saves both sides time-consuming administration.

 

About the Author:


Sarah - Shopify Expert & Branding Specialist

 

SARAH

Shopify Expert & Branding Specialist