UK online retailer selling to German customers

Hello everyone,

I have tried to find the answer to this but keep getting different answers. I am an online retailer registered for VAT in the UK, importing my products from outside of the EU and paying the VAT when they come into the UK. I have been told by some people that if I sell to Germany I need to be VAT registered there and do VAT returns too!! Is that correct? How would that work if I have paid the VAT to the UK customs? I will be passing the VAT threshold of Germany in the first month. I also heard that since Jan 2007 any foreign business wishing to sell to Germany must be vat registered in Germany.

I asked the UK customs and they said that I should be charging the German customers the same VAT as in the UK and do my VAT returns here in the UK!! So I am not sure who to believe. I will be getting professional advice soon but just wanted to get some ideas, so if anyone knows anything on this subject I would be grateful.

Thank you

By copying your title into google, I found the following page:
VAT and e-commerce
The webpage might contain more valuable help for your business.


To my knowledge this is a correct summary of the problem.

As far as I know, there is one german "Finanzamt" responsible for UK companies who have to register in germany.
EDIT: It´s the Finanzamt Hannover-Nord.
More helpful information (in english) on german tax forms here.

Above is correct. In very simple terms as soon as you go (or expect to go) above the VAT threshold for each individual EU country - you need to register and pay VAT in that country. Kinda
makes sense if you think about it. Each local country wants their own VAT income when their citizens are buying goods.

Possibly you phrased the question incorrectly to the UK VAT bods, or you got a moron on the phone. You may not have mentioned that the German sales volumes would be busting the German limits etc.

We operate as a UK Ltd company, but ship from our warehouse in Germany. We are registered for VAT in the UK and also in Germany and do returns of course for each. We also sell into other EU countries but
are below the threshold for the others, but that may change, and we will then need to register for example in France.

German VAT returns are a right pain in the arse as you MUST do them monthly, and the default position is that you MUST submit within 10 days of the end of the month. You can "request" a one month extension, but
still have to do them monthly regardless. Also the German authorities will be pretty anal with regards to paperwork, and they do not trust UK Ltd companies because they are a cheaper form than GMBH so used by the
dodgier types over here.


You don't. It's dead simple in reality. Goes like this:

1. When importing goods from Vietnam etc you pay VAT at Dover etc and then reclaim on your UK quarterly VAT return - just as you do now.

2. When selling to UK customers you charge them 17.5% exactly as you do now.

3. When selling to German customers you charge them 19% and these go onto your new German return monthly.

4. When selling to French/Albanian/Greek punters in small volume you also charge them 17.5% because you and your goods are shipping from the UK. Counts
like a regular UK sale basically.

Over time this will have the effect that pretty much EVERY return made to Germany will be a payment TO Germany, because you are purchasing zero goods to reclaim
back on your German VAT return. So you should get no trouble from the Germans.

It will also mean that over time your payments to the UK VAT office will get lower, and depending on sales margins and volume of German sales, could even end up
as a constant quarterly refund from the UK VAT office 'cos of all your imports.

For instance it works the other way for me. Around 70% of my sales are into the UK - so I am always writing out fat cheques to the UK VAT office, and always reclaiming
loads from the Germans on my imports.

OK, well you sound confident of hitting the ground running on sales in Germany so am assuming you have already covered the issue of customer payments over here? 'cos if you
think they use credit cards - think again!!! Around 1 in 7 of our German orders is paid by credit card, the rest are Lastschrift, Zahlung gegen Vorkasse, Paypal and Nachname. In some
mail orders businesses you also need to offer shipping with a credit invoice for payment - which is a nightmare too far for us.

Hello,

Thank you very much everyone, much appreciated.

Just spoke to the organization which deals with UK businesses and found out something new! The threshold is 100K, I was under the impression it was 50K EUR. So looks like I will reach it in a couple of months.

Johnny English, thank you very much for your help. Could I just ask you what Lastschrift, Zahlung gegen Vorkasse, and Nachname are? I have only ever used paypal as a payment option and I am also opening a bank account in Germany, because I did a little test run and many people seem to want to pay by bank transfer.

Interesting, seems that it is now €100,000.

http://www.e-fs.net/kbase.asp?fileName=vat_e_com

They had a really whacky rule here in the past whereby you had to register if previous year turnover was €16,700 but that might be for businesses 100% registered here etc. Not your problem.

However, bear in mind that the €100,000 is an annual figure so you only need to be doing €8,333 per month and you will be busting the limit on an annualised basis. Not sure of the exact legal stance here,
because in the UK I know if you can "predict" that you will bust the UK £70k limit then you must register immediately. You can't do 2 x £35k months and then decide to suddenly start!!

But...there is logically also no point at all in delaying registration because your business is ALREADY VAT registered in the UK, so the VAT money is either 17.5% going to the UK, or
19% going to the Germans. There is no saving (well 1.5% which is nothing) for you or your customers. Better to get it done from the start and then you won't be messing about
changing all your prices back to €19.99 when you switch etc. Also charging Germans 19% will be more logical for them, and you can show your UMST number proudly on your website!!

If you were, for example, a golf pro then it is worth delaying and juggling to stay under the limits and not register (keeps end user prices down), but because you are already registered for VAT
there is no savings.

Sounds like from your turnover predictions your are in the IT business? Better you than me fellah if that is the case :-) If you wanna discuss courier options just PM me.

Payment options are the #1 biggest nightmare over here for e-commerce.

Lastschrift - this is where you "take" the money from their account. They give you their account number and sort code. We use ELV with Worldpay which is a semi-electronic system. The whole
thing is totally insecure and payments can bounce 5 days after you receive them and customers can claim refunds via their bank up to 6 months later. It's a right game.

Zahlung gegen Vorkasse - this is nicer. You send them your bank details and they pay the money in. Quite popular and we like it!!

Nachname - cash on delivery, arranged either via your courier or Deutsche Post. Pain in the arse for extra paperwork but it works and is also pretty popular here.

As I mentioned the other popular system with the big clothing retailers is they just send the goods out and enclose an invoice. Right bloody nightmare I would think and not something I am prepared to do.

Good Luck.

Shouldn't that be six weeks, JE?

I think the limit for German registered businesses has now been raised to about €17500 / year.

Limit - for what?

Johnny English, I have to say thank you very much again for your help. I really appreciate it.

Yes I was told if you know your business will reach the sales turnover limit you must register immediately.

ooohhhh... some of these payment options sound like a big pain the butt!!

J-E,

I am looking at setting up a trading business (as well as keeping my current job) importing from Turkey and selling in both Germany & UK. We've got the product ready to go, and the customers interested but I'm not sure where the best place to hold stock is. From a logistics point of view it would be cheaper to import and hold the stock in Germany and ship to UK/Germany from here, however I am worried about all the hassle of paying import duty and VAT. The company is set up as a UK ltd company, and we expect €70k sales in UK and €60k sales in Germany (if we are lucky...).

Are the below statements correct.

(a) With Distribution from Germany and UWST registered in Germany:
1. I import to Germany and pay 19% import VAT (Einfuhrumsatzsteuer) on the full volume. Can I reclaim this in the next month?
2. I sell to German business customers (retailers) that are MwST registered, so i don't include this tax on the invoice.
3. I sell to consumers in Germany, so include 19% MwST on the invoice and report and pay this monthly to German taxman.
4. I sell to UK business customers that are VAT registered, so I don't include MwST or VAT on the invoice.
5. I sell to UK consumers, so could either include 19% MwST (paid to German taxman), or register for VAT in UK and charge 17.5% VAT (paid to UK taxman)
6. As a UK Ltd company, operating from germany do I pay corporate tax fully to Germany, or split somehow?

( With Distribution from UK, and VAT registered in UK.
1. I import to UK, and pay 17,5% VAT which can be reclaimed.
2. I sell to German business customers (retailers) that are MwST registered, so i don't include this tax on the invoice.
3. I sell to consumers in Germany, so include 17,5% UK VAT on the invoice and report and pay this to UK taxman.
4. I sell to UK business customers that are VAT registered, but I must still include 17,5% VAT on the invoice and pay this to UK taxman.
5. I sell to UK consumers, so I charge 17.5% VAT (paid to UK taxman)
6. As a UK Ltd company, operating from UK I would pay 100% UK corporate taxes.

Do you have any suggestions on which would be better - I guess you must have looked at this yourself?

I obviously would need a German accountant if I operate from Germany - any ideas how much these cost??

I think you need a Steuerberater!
They have set costs and are highly regulated.
I do not understand your point about rendering invoices with and without VAT.
Surely you charge VAT on all invoices and it is up to the recipient to reclaim
the VAT paid or not depending on the status of the recipient?
VAT is a tax on the ultimate consumer.

Oh, the naivety!

I can probably answer all the above, just not sure I can be arsed to be honest. Its a bit war and peace.

Yes thanks - I'm going to meet a tax advisor to help.

In essence, all I want to know is if I can hold stock and service the business from Germany (preferred from logistics point of view) or if I should do it from UK (where I understand tax system and have a decent accountant). The more I think about it the more complicated it gets...

I have been in the same situation as you, and got advice from HMRC and a tax advisor for help. Although I am probably repeating what others have already said, I thought I might as well let you know what my experience was.

The essential point is where you STORE the goods. If you store the goods in the UK, then you deal with HMRC for VAT until you reach the distance selling threshold for sales to Germany. When you reach that threshold, you must register for VAT in Germany.

If you store the goods in Germany, you must register for VAT in Germany immediately. There is a nil threshold. As soon as you store goods in Germany, you must charge German VAT.

If you want to store goods in Germany, I know a great outsourcing company with excellent rates. They handle all of my sales and are extremely efficient and have excellent rates (they use DHL and send throughout Europe). PM me for details.

If you need to register for German VAT I would use a tax adviser. Doing it yourself could be a nightmare, unless you speak good German. Prices for this service vary considerably. I shopped around and found an excellent company which sorted it all out (I now have the number) for much cheaper than others. PM for details.

I hope I've helped.

Kind Regards
Nicholas

Hello - I have just joined this site.

I work for an online retailer based in the UK.

We despatch items from the USA direct to private individuals in Germany - the value is less than €20,000 per year. These sales form part of our UK business. We have been told that these sales do not fall under the distance selling totals because they are despatched direct from the USA and that therefore we must VAT register in Germany.

Please could anyone confirm that this is correct? Also, is there a VAT registration threshold which we could be below?

Thank you

Caroline

Right, well, one way or the other the German customers must pay VAT on these purchases. You said the sales form part of the UK business so you should be charging 17.5% VAT. It doesn't matter if you ship the items from India or the USA.

But right now I am lost 'cos you are saying that you are already shipping €20,000 per annum from the USA which I find hard to believe as I would imagine your customers going bonkers at the German customs office every day of the week?

Only messy exception is goods with a value per order below about €20 which is why all the mail order vitamin companies went offshore. They then split the orders up to avoid VAT.

So you are charging the 17.5% on the invoice but I would imagine every order getting stuck at the German Zoll (customs office) every time as you are shipping from the USA?? Once it is proven the VAT has been paid they will release the goods.

Then once you look like breaking the VAT threshold for a European country (Germany, France, Italy etc) you must register for VAT in that individual EU country. €20,000 I think is still below the German threshold so you charge UK VAT.

Not quite, if you're a "Kleinunternehmer" then you don't need to (more correctly, you're not allowed to) add VAT to the bill. It must be clearly stated on the invoice that this is the case and no VAT is being charged.


Looks as though it depends on how much business they expect to do this year.

You are just clouding the water here. It is not relevant in this case about a small business in Germany. Also actually you are still wrong 'cos you can still self elect to be VAT registered even if you do €100 per annum. So "not allowed" is incorrect.

Yes, but they can and will throw you off if they come to the conclusion after a couple of years that you are just funding a hobby (no serious signs of attempting to reduce losses / grow the business). My "not allowed to" was referring to the state of affairs had one chosen to work without the VAT registration - I had some idiot gardener do some work for me who added VAT to his bill (he told me he had only just started up and was doing this on the side alongside his normal job , to see if he could build it up to a full time job, so it was pretty unlikely to be earning enough to have to pay VAT), when I asked him for his MwSt. ID number he didn't even know what it was and offered me his Einkommensteuer number instead!

Actually, thinking about it, if I remember rightly, we're not strictly speaking talking about VAT here, but rather the "import duty" (also not strictly the right title, but I've forgotten what it's called, for the moment) which is charged at the VAT rate. ie it's effectively VAT as far as the charges are concerned, but not quite the same thing, which is why my comment turns out to be (probably) misleading.

Edit: remembered it in the meantime, what we're talking about here is strictly speaking "Einfuhrumsatzsteuer" not Mehrwertsteuer or VAT, hence the confusion, my brain went onto auto-pilot on seeing VAT. Here's a link to the Wiki entry about Einfuhrumsatzsteuer

Apparently not having to worry about VAT for nearly four years, is not long enough to recover from the trauma!

I dont think it is import duty. I think it is still VAT. Just because a company has a warehouse in Mongolia makes stuff all difference. They are a European business, cutting European invoices to European countries so it is VAT (or Mwst if they hit the threshold over here).

Besides other problems, the answer to C5s question might depend on who is debtor of the "Einfuhrumsatzsteuer" (turnover tax on imports).
§3(8) UStG:


And this I think depends on the terms of trade (incoterms? - fob, ddp or whatever acronyms they use). If c5s uk company (or someone on their behalf) is clearing the goods for import in germany, the location of the sale is considered to be germany. They have to be registered for VAT in germany, put german VAT on their invoice and can deduct the EUSt from their VAT liabilities.

There could be other reasons why it might be taxed in germany, but I dont have the time and the grasp of the english language to explain the problems with a "Reihengeschäft".

Bottom line: You´d better get professional advice.

Doesn't get much better than this :-) I am already living the nightmare dream. Problem is basically that you can ask a UK or German accountant and chances are you can get a proper wrong answer. Been there, done that and bought the T shirt.

Normally calling your local UK VAT office is the best bet and they will clear things up correctly. You can even get them to put something in writing to cover your arse - it's better, safer AND CHEAPER than the average accountant.

Nothing wrong with that. A USt-ID-Nummer is optional (and must be applied for). You only really need it if you are trading abroad as it was created to comply with EU standards and be part of the VAT Information Exchange System (VIES). The Einkommensteuernummer is perfectly acceptable and in fact is required - this is the traceback number the Finanzamt require on every German invoice

Not sure you're right about that YL. It may have started out that way and in fact I only had to get my MwSt.-ID number when I started importing PCs from the US and Sky decoders from the UK in the early '90s.

Nowadays I believe you get one when you register for MwSt. and I'm pretty sure it's one of the things you have to include on your invoices as well.

I'll try and check up on that, so as to avoid spreading any more mis-information (once ought to be enough in one thread ), but I probably won't be able to get round to it until tomorrow.

Edit: I've checked up on it and as far as I can see the MwSt.-ID number is indeed not compulsory. Anybody registered for VAT may apply for the number, even if you don't deal overseas. However, in practice it is de facto necessary for you to obtain a MwSt.-ID number, because your suppliers are only entitled to free you from the VAT if they know your MwSt.-ID number. Invoices must include either your Steuernummer or your MwSt.-ID number.

But again, only generally necessary for trading outside of Germany and within the EU. A small trader with local customers has no need of this. There's no harm, and no cost, however, to have one, just in case...
You would not have needed it for importing those PCs from the US, by the way

Yeah, that occurred to me after I posted, but both occurred at more or less the same time and I hadn't thought it through in detail when I posted.

So overall your contributions to this thread have been royally trashed then RMA. How ya left?

Got to have a bad day occasionally, I guess.

Still, I was right that what the thread was actually about initially is Einfuhrumsatzsteuer and not MwSt., so I guess that's better than nothing!

Sorry Dude to piss on your chips, but "Einfuhrumsatzsteuer" I think translates as "IMPORT DUTY" which I reckon you will find would apply only to products brought in from OUTSIDE THE EU.

The original peeps clearly stated he was in the UK, as did the 2nd one, so this is all INTERNAL EU tax issues - there is no importing of anything going on.

So all discussions relate to either UK VAT or German Mwst.

Have a nice day.

@JE: If by OP you mean A999 you are right, but C5 who posted the followup question clearly said that they dispatch the goods from the US. Therefor at some point E-UST has to be an issue...

... and that is precisely the context in which I was posting - the current question.

By the way, translating "Einfuhrumsatzsteuer" as "import VAT" does not make it the same as "Mehrwertsteuer".

I agree that one is messier, but they stated still that they ARE a UK retailer, selling to German customers so that the discussion is STILL actually related to Mwst or UK VAT. Location of the warehouse is just a confusing side issue. The invoice is cut by the UK company and will have either UK VAT at 17.5% or it will have Mwst at 19% if they are hitting the threshold.

For example if am a German retailer, selling to German customers but have my warehouse located in Italy - I don't get tangled up with Italian VAT because the warehouse is performing just a shipping function.

So when the goods from the USA arrive in Germany around 90% chance that they WILL get stuck at local German Zoll offices. But once the customer shows that VAT or Mwst has been paid it should clear I reckon.
There can be no import duty to be paid as the customer has already paid the UK VAT.

In theory you might say the UK company "could" choose to 0% rate the original invoice, and then allow the end user customer to pay IMPORT DUTY when the goods arrive from the USA - but you ain't allowed to do that if you are a UK company selling within Europe - you must charge VAT.

Ironically even if they set themselves up as a USA company in the USA - they STILL need to register and charge VAT to European countries. Law changed in 2003 to catch software downloads.

So whatever way you hack this - nobody is paying IMPORT DUTY at any stage of this game. It's a red herring.


Sorry bad choice of words for the translation. I have changed to IMPORT DUTY, which still I reckon has nothing to do with any of this stuff at all.

Or to pose a question to clear things up:

For those talking about "Einfuhrumsatzsteuer" - who and when do you think someone will be paying this? Hint: I say nobody at any time in any of the above discussions.

Boy am I glad I haven't been involved with importing things for about 10 years now!

@JE, that last post clears up quite a lot of the questions, it still leaves me a little puzzled as to who is paying the import duty? Or am I wrong in thinking that goods being shipped from the US to Europe are going to have to pay import duty somewhere (even if depending on goods it may only be the odd couple of %)?

Nobody I reckon!! It does not apply on any of the above scenarios.


Yes I think you are wrong. That is my point. I don't think IMPORT DUTY will ever apply in these circumstances. I cannot see at what stage it could apply? Cannot apply at the Zoll for the end-user as the poor bugger has already paid 17.5% (or 19%) to the company with his credit card. And the UK company cannot ZERO rate the invoice to an end-user*.

p.s. It might be tricky to get your head around as you have imported things from overseas for a business in the past - which is different. When I import from Israel, China etc as a company then I do indeed pay the IMPORT DUTY. But here, in both cases, we have UK companies selling to German end-users and you MUST therefore charge the Mwst or VAT (and therefore nobody is gonna be paying IMPORT DUTY). If you dig around in google you will see that USA based companies flogging software, such as Symantec for example, will charge you Mwst if you purchase direct from them - that is because they have to be registered for Mwst in Germany (and VAT in the UK). Obviously no import duties in that case.

*Obviously if the UK company is shipping physical goods OUTSIDE THE UK to a Mwst registered GERMAN company, then there is the option to ZERO the invoice if they are supplied the German company's Mwst number. As in DE123456. Now in THAT case if the goods are physically shipped from the USA then when the goods arrive at the German Zoll then the German company WOULD then pay the dreaded IMPORT DUTY (at 19%), which he would then reclaim on his next return. But only applies of course on B2B business and the peeps #2 clearly stated:


So yet again I can see NO IMPORT DUTY issues on any of the areas discussed so far.

I think you've pretty well got the crux of it here and it all makes perfect sense now!

Funnily enough, my slightly skewed offerings appear to have resulted in a thread which will, it the form it's now reached, be very useful for future enquiries. Your two posts #33 and #35 taken together, apart from being a model of clarity, really do lift the veil on what is otherwise a very confused (and confusing) situation - my heartfelt thanks and congrats!

Ha! Until we discover I am talking utter bollox which is always a distinct possibility.

I've been watching to see how this thread developed.

I believe import duty maybe payable at least for certain product classifications. For goods imported into the EU import VAT (Einführumsatzsteur) is payable at the rate of the destination country (not the port of entry), and is usually equal to the equivalent VAT rate (in Germany 19% on most items, 7% on some). In addition import duty may be payable, this being an EU-wide rate depending on the the goods imported and where they are imported from. All goods are classified according to the "TARIC" code and for every classification is an import duty rate. You can determine the TARIC code for a particular product here and using that code the rate applicable here. Many goods are zero rated however.

To take an example. A piece of machinery is shipped to Berlin from the USA and enters the EU via Rotterdam. The declared value of the machinery is €10,000. The shipment from USA to Rotterdam cost €1200 and from Rotterdam to Berlin €300. According to its determined TARIC code 2% duty is payable. 19% import VAT is applicable for Germany as it's final destination.
Having this detail a typical calculation (§ 11 UStG) would be as follows:

Value for customs purposes:
Declared import value: 10.000 Euro
Shipment to Rotterdam: 1.200 Euro
= total customs value of 11.200 Euro

Calculation of customs duties payable = customs value x import duty
11.200 Euro x 2 % = 224,00 Euro

Calculation of import VAT:
Customs value: 11.200 Euro
+ transport costs inside EU: 300 Euro
= value for import VAT: 11.724 Euro

Calculation of Import VAT payable: Import value x rate
11.724 Euro x 19 % = 2.227,56 Euro Import VAT

Total customs fees payable:
224,00 Euro customs duties
2.227,56 Euro import VAT
= 2.451,56 Euro

To go back to the case in question where imported goods are invoiced from UK, despite being shipped from from US direct to Germany. The above calculation applies, irrespective of the point of invoicing. 19% import VAT, and possibly import duty, depending on type of goods. Note that duties are only levied if they exceed a total of €10 - where the calculation results in a payment less than €10 no duties are applied (hence the €40 import value "tax free"). Somebody has to pay these duties or at least account for them. For smaller shipments it will typically be the end-consumer on receipt. For larger (value) payments then an accounting arrangement is made by the shipper with the originating supplier or responsible dealer. The US software companies selling over the internet into Germany charge their clients German VAT. They declare the "virtual" import to the authorities and are charged themselves, so are reclaiming this from the end customer

Note that if the good were already "in free circulation" in the EU then a completely different calculation applies. UK VAT would be applicable on the invoice from UK unless the goods were being delivered to a bona-fide trader in another EU country, OR the supplier was registered in Germany for VAT (which they must be if their turnover here, even for distance selling exceeds a certain amount)

Can't use that expression - it was banned a few posts ago. The correct term we are using is IMPORT DUTY :-) That said UK Customs and Excise use the expression "Import VAT".

So in your mind YL6, how does the widget invoice read from Mr. UK-Plc to Mr. End-User-German punter?

Cost of Widget €100

then:

+ VAT @ 17.5%

or

+ Mwst @ 19%

or

+ Import Duty @ 17.5%

or

+ German Import Duty @ 19%

or

0% summat else???


Edit: Sounds like on the above, you reckon the end user should pay the 19% as an IMPORT DUTY into Germany, and that the UK company MUST therefore zero rate the invoice? I just cannot get my head around a UK company being allowed to zero rate an invoice to an end-user in Germany. Indeed this would imply that the company could also ship direct from the USA to UK customers and zero rate - forcing customers to pay duty on the import?

Some official stuff on the gripping discussion:

http://customs.hmrc.gov.uk/channelsPortalW...ment#P225_34956


Sounds to me like they want you to put them into "free circulation" and therefore normal rules apply? The UK company effectively pays the normal import duties on the US goods, as if they had physically docked the goods in Southampton, and then cuts an invoice charging Herman the German either 17.5% VAT or 19% Mwst if they are trading above the turnover threshold.

702/7 states:

http://customs.hmrc.gov.uk/channelsPortalW...tyType=document

Now I am confused. Are you assuming that the goods are in the UK at some time? They are not. According to C5 they were dispatched directly to germany.

You cant really say how the invoice would have to look like, as C5 wasnt precise enough about her case. You were assuming that the UK company had a warehouse in the US. My first thought was that the UK company orders the stuff from a US based retailer who then dispatches the goods in their name directly to the german clients. We dont know...

My guess (and it is just that) would be:

Ware 1000 €
Transportkosten, etc 100 €
MwSt 19% = 209 €
gesamt 1309 €

Maybe (im not sure about this import-export stuff) there needs to be an additional comment, like this:
DDP (delivery duty paid)
Which would mean that C5s company has taken care of the import duty and the german customer doesnt need to bother.

C5s company would then declare VAT in germany:
USt 209
entrichtete E-USt -190 (or whatever they had to pay as import duty)
total: 19

There are two separate "taxes" or levies on any import into the EU - "Import duty" - an arbitrary %age, dependant on the (type of) goods and their origin, and "import VAT" conveniently, but confusingly set at the domestic VAT rate of the country of destination, or at the port of entry when the goods go into free circulation within the EU. While the rates are the same, import VAT and domestic VAT are strictly different taxes although treated similarly (for example insomuch as being reclaimable by traders)

As to who pays this and which (domestic) VAT rate goes on the invoice, then this is a completely different kettle of fish. If the originator has an account with the German customs then they will be charged directly for both import duty and import VAT. As an EU trader they are entitled to reclaim the import VAT back from the German taxman, but not the import duty. Their invoice to the consumer will include the import duty on the net price of the product (it cannot be specified individually) and VAT according to their invoicing guideline - UK @17.5% if their trade with German consumers is below a certain level, or German VAT @19% if over, but in which case they are (must be) registered for VAT in Germany. If the trader does not account directly with German customs, then the invoicing position is more complicated, and I have to say (a rarity), I'm not sure. Without doubt the consumer will pay both import VAT and duty on receipt of the shipment and cannot reclaim it. I don't believe the originator can charge it again - from anywhere - or maybe they can. Alternatively they charge domestic VAT on the invoice and offset it with the amount already paid directly by the customer - but that would be too complex. If no-one hears from me for the next 2 days it's because my head is buried in the relevant statutes.

Has anyone noticed the certain irony that while we all discuss this to death, the contributor who started this discussion has not been back the forum since she asked the original question?

No I was not assuming that. No idea why you assume I was assuming that.

Methinks coming round to my line of thinking. Forget the CUSTOMS DUTY for a minute, which as we know varies from 0% to 66% and all sorts inbetween. I was just assuming for this exercise it was a product without any extra duties. But it still doesn't really affect things.

So assuming 0% "extra import duty" you agree that the invoice from the UK company to the German punter will be loaded with VAT at 17.5% or Mwst at 19% (depending on turnover levels).

So we agree on the VAT in effect. Just now tossing about the issue of import duties into the EU depending on the product type. Hmmmmmmmmmm.

Now still going back to the offical link I posted it clearly says:


Therefore it goes back again pretty much as I said. The UK reseller must "put the goods into circulation" by paying the CUSTOMS DUTY and the IMPORT VAT. Then when he invoices Herman the German he cuts a regular invoice with just 17.5% or 19% as discussed a zillion times - but nothing else...probably!!

Why?

Well most of us that import end up paying extra duties, but we never show these on an invoice to a customer 'cos it relates to our BUY price. If you showed a customer the amount of duty you had paid for an import you would also be INSTANTLY showing them your buy price!! I pay 66% anti-dumping duty on some of my imports.

Whilst I think this is correct, I can see lots of potential fun and games when the products turn up from the USA, and the German Zoll know that they have a 66% duty rate - and you try and explain that this has already been paid by the UK supplier (only on the UK supplier purchase price of course), and is therefore built into the price.

It's a right mess actually 'cos basically when the UK company receives their invoice from the USA supplier, they need to immediately pay the customs duty and/or import VAT, errrrrrrr - and then claim them straight back again. Man, how do they do that in reality? I think my brain is melting.

Trolls, hand grenades and all that stuff.

I have learnt something from JE's and YL6's input, so thanks chaps. It is much appreciated.

The links you gave seem to imply that.
"Import VAT relief for goods supplied onward to another country in the EC"
Doesnt that imply that goods first arrive in the UK and then are sent onward to some other EC country?

When the goods arrive directly in germany, they are put into circulation in germany. My translation into german would be "zum freien Warenverkehr angemeldet" and if you do this you pay E-USt according to german VAT tax rate. If this is done in germany by the UK company, according to german VAT law the sale (to the german customer) has to be taxed in germany. Therefor E-USt matters to the question if it´s 17,5% UK VAT or 19% german Mwst.

I dont think UK customs will be involved at all.

so...

Whats the invoice gonna say then? Show me a sample.

I think nomenclatre used for the respective taxation authorities may be clouding the issue and possibly causing confusion between JE and Freising here insomuch as UK Customs (actually called "HM Revenue and Customs") administer UK VAT, so you need to distinguish between the three different levies - Customs duties and tax payable (in Germany Customs/Zoll, in UK HM Revenue and Customs) and VAT applicable (in Germany Taxman/Finanzamt, in UK HM Revenue and Customs)

Thanks for your replies.

The complication is that we are selling goods which are zero-rated in the UK, however they are charged at 7% in Germany. We also mainly only sell goods with a value of less than €20, so the duty issue is also not generally applicable.

So as I understand it, there is a German VAT registration threshold under which we could still fall? What is the value?

Thanks!