Overview of tax regulations in Germany
Germany can be quite a tough place to get through when it comes to bureaucracy and obligations.
In other countries it might be relatively easy to just put up your lemonade stand and start selling lemonade.
In Germany though, everything has to be written down and properly registered, so everything can be tracked and calculated accordingly in the German tax system.
One of the most important numbers you will need to take care of is the German Vat Number.
We will show you in the next chapters how to get a German Vat Registration, so you can start selling your products online.
There is more than the Vat number though.
One very important and specific thing needed to sell shippable products in Germany is called Verpackungsregister.
As the importance of sustainability is quite high in Germany, laws were published that require a thorough registration of your products’ packaging.
Before we dive into both topics, let’s first see which requirements are needed to become a Seller on Amazon & Ebay.
Requirements to become a seller on Amazon & Ebay
To be a seller on Amazon and Ebay, you will need to go through a standard process of registration. To your luck, both these platforms have laid out specifications on what they exactly need from you.
We differentiate hereby between account regulations and product regulations. On the account side, you will need to register with proper information on your persona and your company. On the product side, you will need to make sure your products are legally allowed to be sold in Germany, as well as on Amazon and/or Ebay. Some products might even need specific validation.
This might be true for jewelry, music, watches and videos, DVDs & Blu-rays. Where it becomes unique is the law side of things.
The allowance to sell shippable products in Germany:
As stated in the overview, Germany has a specific law regulating packaging, controlled and tracked through the Verpackungsregister. If you’re asking yourself “Do I need that?” - Here's a quick rule of thumb for the Verpackungsregister. Everyone who ships a non-digital product to or in Germany has to register on the Verpackungsregister site. The most important thing here is that you don’t fall into the outsourcing-dropshipping-trap. What is the outsourcing-dropshipping-trap? Glad you asked. Usually, when companies outsource their package management, they do that to save time, money and effort. Especially time. You take care of the product, they take care of the packaging, great deal, right? Well, wait a second. Here comes the Verpackungsregister. The Verpackungsregister clearly states the owner of the product is responsible for the correct shipping packaging of the product.
So yes, you can outsource your packaging. You can even let Amazon take care of the packaging. Just make sure you don’t fall into the trap, and double check with your packaging partner that the packaging follows 100% the guidelines of the Verpackungsregister.
General overview of Europe Vat Number Regulations
Usually, Vat Numbers are needed to track and regulate taxes.
As these taxes may differ from country to country, things might get complicated when you start to sell your products abroad.
Initially, most countries came up with a fantastic solution to make it easier for starting entrepreneurs – the so-called distance selling thresholds, also known as the national VAT registration thresholds.
The system is quite simple.
You only need to worry about VAT in a foreign country when you surpass a specific threshold for a particular country inside the EU.
These numbers differ hugely from country to country.
In Austria, the threshold might be 35k Euros, while in Germany, the numbers are substantially higher, around 100k Euros. Almost triple the threshold!
Amazon, eBay, and Country VAT Numbers
Here comes Amazon and eBay.
These platforms sell internationally, and they are undeniably one of the most used biggest retailers out there.
To give you some perspective:
To this date (November 2021), over 9.7 million sellers exist worldwide on Amazon, of which 1.9 million are currently active on the marketplace, each selling more than 4000 items per minute on average.
You can imagine that controlling each seller to make sure they get a VAT Registration for a specific country once they pass the national VAT threshold is quite a draining task, not to mention a lot of work.
That’s the reason why Amazon and eBay decided not to care about the national VAT thresholds.
This means everyone, who sells a product to a specific country in Europe through Amazon and eBay, has to register for a VAT number in that country – with no thresholds or exceptions.
How to get a german VAT Number
We figured out that Amazon and eBay want you to have a German VAT Number right off the bat, but how do you even get one?
The process itself is pretty simple once you get the correct information.
Foreign companies have to apply at the responsible tax offices in Germany.
Yes, depending on where your company is located, the responsible tax office may differ.
To give you an example, as a company based in the UK, the tax office Hannover-Nord will be your tax office of choice.
The only catch is that most tax offices are slow, so you might need to wait several weeks until you get your number.
Most importantly, there is a high chance of a language barrier, as these offices are famous for their ability only to speak German.
It’s pretty standard that after application, you’re waiting time might take up to two months – if all done correctly, with no chance of feedback in between.
To ensure you don’t miss out on essential information, we made a complete guide for you on applying for a German VAT number.
3 key pieces of advice on how to jumpstart your success as a foreign seller in Germany
1. Place inventory in Germany
While you can take care of over 20 countries right off the start, we recommend focusing on one country optimally and a maximum of two to three countries.
We recommend focusing on Germany first, as Germany has one of the biggest buying powers on the online marketplaces, especially on Amazon and eBay.
Through this high demand in product availability in Germany, you have the possibility of high revenue quite early on.
To help you jumpstart your Amazon and eBay success in Germany, we recommend placing your inventory in Germany.
If you do that, you will achieve the best delivery times, and even save costs, as you can reach all your customers with the fewest cross-border fees.
2. Test the waters
This is one of the essential pieces of advice you can get when starting.
Even if you are super confident that one product will make it, there is still a high chance your target audience thinks differently.
Figuring out which products are right becomes even more difficult if you come from a foreign country with a different culture.
To overcome this enormous challenge of cultural adaptation, we recommend testing the waters with multiple products with a low amount of stock.
Keep your products either in a specific niche or within similar niches, have multiple products with different qualities and target groups, try them out, and figure out which things you might need to adapt.
Electronics might have different plugs or voltages; labels and packages might need specific treatment for some of your products to fit your new german audience.
3. Focus on building a brand
Here is where we see most entrepreneurs fail on the German market.
The German market is quite oversaturated, and the German audience has an incredibly high standard of quality and other factors, such as sustainability, innovation, comfort, customer support, you name it.
If you want to build a sustainable business long-term, you will need to create a brand people like to associate with.
To do that, we recommend putting your audience as the top priority.
Figure out their needs and serve them fully.
Answer every question in the best way possible.
Take feedback seriously and show that you are willing to apply constructive criticism.
If you follow these guidelines, you will be off to a good start.
You might even personalize the first packages with a little friendly note to build an even stronger connection with your customers.
Ready to ship your products to Germany?
To sum it up, there are multiple things you have to have in mind to start selling and shipping your products in Germany successfully.
From getting a German VAT Number to figuring out the proper steps and product optimizations and implementations to get the most out of your revenue channels.
To help you set everything upright, we recommend giving us a quick message or book a free call.
To sum it up, there are multiple things you have to have in mind in order to successfully start selling and shipping your products in Germany.
From getting a German Vat Number to figuring out the right steps and right product optimizations and implementations to get the most out of your revenue channels.
To help you set everything up right, we recommend giving us a quick message.
Click here to book a free call.