§ 22f Abs. 1 Satz 2 UStG: Do I need a German tax certificate?
What is my activity?
Most retailers use incorrect vocabulary, associate wrong ideas and with such a practice try to figure out their compliance requirements. We will focus on helping goods/material retailers.
We keep it simple for a maximum understanding:
Step 1: YOUR business model
Firstly, in terms of taxation we do call a sale/purchase/release, etc., a TRANSACTION. It is the formal name for “operations”, “business model”, “activity”,…
It is so far the MOST IMPORTANT thing to figure out.
Also, as a result, the correct classification will ensure a clear understanding of what the German administration will require from you as a foreign retailer, and your usual marketplaces.
It is very simple to determine YOUR transactions, for instance, you will just have to answer three simple questions:
- Where do my dispatches start from? (and NOT where is my business located)
- Where do my dispatches end? (and NOT where are my buyers pay from or are located)
- Who are my customers?
Finally, we will simplify focusing on retailers concerned by the German 22f tax certificate. We assume that goods are stored in an EU member state and delivered to individuals in Germany.
Step 2: So, what does “distance sales” mean?
Secondly, you can refer to Directive 2006/112/EC, articles 32 to 36 for detailed information.
Remember : for sales of goods to individuals, there are two possibilities:
- the “default rule”
- a temporary “conditional relief”
Furthermore, the “default rule” considers as a competent authority the one where goods are dispatched to. So, this means that BEFORE the very first sale to Germany, you as the retailer MUST be identified and registered for VAT purposes.
Also, the “conditional relief”, agreed by all member states to remove administrative burdens for SMEs, lays out STRICT conditions.
- the destination is not a business
- member state of delivery published a yearly maximum delivery threshold
- the distinct member state of dispatch is where the delivery happens
Now, what is your business model? What is your typical transaction?
You dispatch from your own state
For instance, if your goods are stored in France, Austria, Spain, Italy, etc., and the delivery address is on German territory, you will be eligible for “distance sales” administrative relief. The competent authority can be – if you respect all of the conditions – your own tax revenue administration. This allows you to invoice, collect and submit returns for the VAT of your own state.
This scheme is not compatible with products subject to excise duties!
You dispatch from German territory
So, when you store and deliver your goods within German territory, that is to make your transactions known as “domestic deliveries”. Under these terms you cannot have access to “distance sales” relief.
In short, this happens to Pan-European FBA, or retailers fulfilling orders from/or to Germany themselves, or by using “Fulfillment by Amazon”.
In this case there is no benefit of “distance sales” relief. You MUST invoice, collect and submit German VAT.
What is the point of a § 22f Abs. 1 Satz 2 UStG tax certificate?
Also, over a few months, we observed the German authorities’ practice of insufficient clarity or answers over transactions not clearly defined. If you require a § 22f Abs. 1 Satz 2 UStG tax certificate, and if you store goods in Germany and not being yet registered, this will not give you any results.
You NEED identification plus registration for VAT purposes if you (or your marketplace) store goods in Germany.
The German revenue administration might not give an answer to any unclear applications made. You need to be fully aware of this fact.
Requiring the § 22f Abs. 1 Satz 2 UStG tax certificate will very probably lead you to a complete identification plus VAT registration as a liable person.
Step 3: VAT Number? Identification? Registration? TIN? VAT purpose? What is your specific compliance need?
It all begins with an ID number!
Thirdly, the TIN or Tax Identification Number: what you read is what you will get!
This means, your business will have an identity as a foreign company or trader, nothing else. See format and structure of VAT Identification Number by country for your detailed information.
Your rights always come with duties!
VAT – Value Added Tax
Hence, if you sell to people that cannot be liable for VAT, and you must charge German VAT, the revenue administration of Germany will allow you under the application for VAT liability regime.
Consequently, the VAT liability regime will give you:
– a right to deduct
Also, you need to report, yourself, on your periodic VAT returns, the amounts of VAT you were charged by your suppliers, following the same rules as German companies.
– compulsory periodic returns
Furthermore, you must submit monthly / bi-monthly / quarterly local compulsory VAT returns.
Finally, the only liable person is the seller, as per the law. Also, specific situations affect the involvement of the marketplace. However, if your company is based in Europe, you are responsible.
Informative declarations (ESL or ECSL)
Fourthly, if you have supplied goods to VAT-registered customers in another EU country (or issued any credit notes) you will need to complete an EC Sales List (ECSL). Also, consider your own VAT-registration in Germany as another business for VAT purpose – you will need to report all movements of your own goods between your member state and Germany.
Furthermore, read the simply called “ZM” guide, which stands for “Zusammenfassende Meldung”. Companies running a business in Germany, will fill this form in on a regular basis.
Important: if your marketplace moves your goods from a member state to another, you are liable to make statistical statements (INTRASTAT). As a result, this is closely interlinked with the VAT system relating to intra-EU trade to ensure the completeness and quality of the statistical data,… and cross checks!
You are required to provide information to your state’s and destinations state’s competent authorities (dispatch / arrival).
Thresholds are quite high in most member states. You need to keep an eye on them, as most of the VAT services integrated in marketplaces do not even mention them, and they are definitely part of the compulsory duties. Also, the seller is responsible for INTRASTAT. Finally, a fine is possible, if you make no submission as a Provider of Statistical Information (PSI).
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