registering an e-commerce business in other EU country yay or nay?

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Hello Community,

 

I have been a freelancer in Germany for 10 years. At least 4 different tax advisors, 2 of them a nightmare rip-off, 1 lazy and the best of all retired for good.  So much pain for making sure I don't mess around, so much of 'black box' services where I have no rights, they do whatever they want, when they want, and I just pay and sign.

Now for about a year I have been working on a business idea, testing, and really considering if I should move on with a small e-commerce business. The only thing holding me down is exactly that, on the top of the struggle with paperwork as a freelancer, do I want the headache of a 'Einzelunternehmer' in Germany?  Hard to let my little dream go, and I really would like to try, but just reading about the registration process, IHK, that and that insurance for zero profit plus being vulnerable to shark tax advisers scare me.

 

Then I read about Estonia E-residency, that I could actually open up the business of an online shop anywhere in EU. Important: I am not trying to pay less taxes, I pay what I have to pay, I am trying to operate hassle-free as much as possible, and hopefully in 3 years to make profit. My doubts - How is the process of declaring that in Germany, where I actually reside? Because if after all I still have to recur to German tax advisers, honestly, the appeal is gone.

 

So, if one is traumatized by bureaucracy and arrogance and bad costumer service, and the top priority is not 'avoid taxes', does it make sense to open up a business outside of Germany? Or Finanzamt will be even more a pain to me?

 

I just want to create and sell products for children...

 

sorry for the long message, thanks in advance!

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8 hours ago, segundgh said:

Hard to let my little dream go, and I really would like to try, but just reading about the registration process, IHK, that and that insurance for zero profit plus being vulnerable to shark tax advisers scare me.

 

Then I read about Estonia E-residency, that I could actually open up the business of an online shop anywhere in EU. Important: I am not trying to pay less taxes, I pay what I have to pay, I am trying to operate hassle-free as much as possible, and hopefully in 3 years to make profit. My doubts - How is the process of declaring that in Germany, where I actually reside? Because if after all I still have to recur to German tax advisers, honestly, the appeal is gone.

 

So, if one is traumatized by bureaucracy and arrogance and bad costumer service, and the top priority is not 'avoid taxes', does it make sense to open up a business outside of Germany? Or Finanzamt will be even more a pain to me?

 

Opening a company outside Germany while you're still resident in Germany would only add another layer of complication (and therefore cost).

You would then need a Steuerberater more than ever.

 

And there are other complications you don't know about yet if you want to sell items to clients outside Germany, unrelated to the Estonian complication, e.g. OSS (one-stop shop) since that - starting 1. July 2021 - also includes the distance selling of physical items: https://www.bzst.de/DE/Unternehmen/Umsatzsteuer/One-Stop-Shop_EU/one_stop_shop_eu_node.html

--> if you sell for more than 10,000€ per year to EU private customers, you will have to registee with OSS and charge your EU private customers their home country VAT rate, even if you are not registered for VAT in Germany, i.e. if you are a Kleinunternehmer here.

 

The only people who should open an Estonian company are people who actually live in Estonia.

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14 hours ago, PandaMunich said:

Hey PandaMunich,

thanks so much for your input. So, let us say I have very modest profit perspectives, and considering the crazy bureaucracy just to sell a couple units per month at the beginning, is this something one can do IN Germany, as a independent one-person-shop, without spending tons with tax advisor? Last year, as a freelancer, I collected 1,125.00 in VAT, and for that I paid extra 98,00 monthly to Tax Advisor so just he could process the VAT each quarter. That excludes all the actual costs to handle my tax declaration.  Additionally, now when I decided I had enough and I want to depart, I was asked to pay 100 EUR for a DVD with my records for 2020/10 OR 633 EUR for a "pauschal" so they keep my records for 10 years.  That is exactly what puts me off, things made so complicated (to me), that I am forced to rely on extra services for an insignificant profit, in order to not mess up with FinanzAmt.  I am not planing to stop as a freelancer, I just dream of a small niche products to be sold via Amazon mainly, and cannot believe how hard it is just to start.   I have heard I have to register at IHK, I have to pay different insurances, and on the top of that, after a couple of yours "ich krieg ärger" from FinanzAmt if they deem I am doing that just like a 'hobby'... Really? :(

 

14 hours ago, PandaMunich said:

Opening a company outside Germany while you're still resident in Germany would only add another layer of complication (and therefore cost).

You would then need a Steuerberater more than ever.

 

And there are other complications you don't know about yet if you want to sell items to clients outside Germany, unrelated to the Estonian complication, e.g. OSS (one-stop shop) since that - starting 1. July 2021 - also includes the distance selling of physical items: https://www.bzst.de/DE/Unternehmen/Umsatzsteuer/One-Stop-Shop_EU/one_stop_shop_eu_node.html

--> if you sell for more than 10,000€ per year to EU private customers, you will have to registee with OSS and charge your EU private customers their home country VAT rate, even if you are not registered for VAT in Germany, i.e. if you are a Kleinunternehmer here.

 

The only people who should open an Estonian company are people who actually live in Estonia.

14 hours ago, PandaMunich said:


14 hours ago, PandaMunich said:

 

 

 

Opening a company outside Germany while you're still resident in Germany would only add another layer of complication (and therefore cost).

You would then need a Steuerberater more than ever.

 

And there are other complications you don't know about yet if you want to sell items to clients outside Germany, unrelated to the Estonian complication, e.g. OSS (one-stop shop) since that - starting 1. July 2021 - also includes the distance selling of physical items: https://www.bzst.de/DE/Unternehmen/Umsatzsteuer/One-Stop-Shop_EU/one_stop_shop_eu_node.html

--> if you sell for more than 10,000€ per year to EU private customers, you will have to registee with OSS and charge your EU private customers their home country VAT rate, even if you are not registered for VAT in Germany, i.e. if you are a Kleinunternehmer here.

 

The only people who should open an Estonian company are people who actually live in Estonia.

 

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4 hours ago, segundgh said:

So, let us say I have very modest profit perspectives, and considering the crazy bureaucracy just to sell a couple units per month at the beginning, is this something one can do IN Germany, as a independent one-person-shop, without spending tons with tax advisor?

Only if you know German and are willing to learn to do all things related to your business yourself.

 

At 1,125 VAT, if we assume that what you sold carried 19% VAT, you had a turnover of around 6,000€.

--> this is under the Kleinunternehmer limit of 22,000€ turnover per year.

 

So if you expect your turnover to remain that small, you could, to simplify matters:

  1. switch to being a Kleinunternehmer, so that you no longer have to do quarterly VAT announcement
  2. do not sell physical items to EU private persons --> that way, you avoid the OSS registration in case your sales to EU private persons exceeds 10,000€ per year:
    Which leaves selling to German customers or to non-EU customers.
  3. never buy more than 12,500€ per year in items from other EU countries
  4. never buy services for your business from outside Germany, because if you do, you have to pay 19% German VAT on them and file the VAT announcement, despite being a Kleinunternehmer in Germany.
    More than first meets the eye is provided from outside Germany, e.g. if you want to do Facebook ads for your business, that service would be provided by Facebook from Ireland.
    Same with Amazon, they provide the Amazon advertising from Luxembourg.
    And ebay seller fees come with an invoice from ebay Luxembourg: https://www.haufe.de/finance/haufe-finance-office-premium/ebay-steuerliche-besonderheiten-fuer-unternehmer-4-umsatzsteuerliche-besonderheiten-bei-ebay-auktionen_idesk_PI20354_HI6474790.html
     
4 hours ago, segundgh said:

I was asked to pay 100 EUR for a DVD with my records for 2020/10

That's the DATEV archive DVD, which costs around 40€, plus probably their time applying for it and then sending it to you, see here: https://www-iww-de.translate.goog/astw/sonstige-steuern/gebuehrenrecht-verguetung-fuer-eine-archiv-dvd-bei-mandatsende-f116869?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui,elem

 

5 hours ago, segundgh said:

I just dream of a small niche products to be sold via Amazon mainly, and cannot believe how hard it is just to start.

Then you had better remain VAT-charging.

And you are opening a whole new can of worms, since Amazon will push you to FBA (fulfilment by Amazon) which means that you have your items in Amazon's warehouses and they merriley shift them between their warehouse in different EU countries, which means that you will need to register for VAT in all these countries. People usually use a service like Avalara to create the VAT announcements in all these countries.

 

You sound naive: selling on Amazon is not something you should do lightly.

Start of reading here: https://www.quaderno.io/blog/how-to-handle-eu-vat-if-you-use-amazon-fba

 

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On 9/25/2021, 8:43:13, PandaMunich said:

Hello Panda, wow, yes, I am that naïve at the same time, see so many people selling their products, I just wonder... What you describe for me, and I cannot say thank you enough, sounds insane, in every line I read 'don't do any business, be a Beamte' LOL, because not selling to private EU persons is what? opening up a physical shop around the corner so I sell to German residents, maybe... Based on what you say, running a small e-commerce business is just a no-go in Germany, I guess that is it for my 'dream'... On the VAT topic, I have no idea on how me as a freelancer was made to declare ridiculous VAT when I could not, but I will not even try to understand, I don't even have a new tax advisor after the most recent rip-off.  Thank you anyways, I will keep an eye to the chance of meeting anyone who sell their stuff on Amazon/Instagram, etc to satisfy my curiosity on how dare they under such crazy bureaucratic conditions...

 

On 9/25/2021, 8:43:13, PandaMunich said:

 

Only if you know German and are willing to learn to do all things related to your business yourself.

 

At 1,125 VAT, if we assume that what you sold carried 19% VAT, you had a turnover of around 6,000€.

--> this is under the Kleinunternehmer limit of 22,000€ turnover per year.

 

So if you expect your turnover to remain that small, you could, to simplify matters:

  1. switch to being a Kleinunternehmer, so that you no longer have to do quarterly VAT announcement
  2. do not sell physical items to EU private persons --> that way, you avoid the OSS registration in case your sales to EU private persons exceeds 10,000€ per year:
    Which leaves selling to German customers or to non-EU customers.
  3. never buy more than 12,500€ per year in items from other EU countries
  4. never buy services for your business from outside Germany, because if you do, you have to pay 19% German VAT on them and file the VAT announcement, despite being a Kleinunternehmer in Germany.
    More than first meets the eye is provided from outside Germany, e.g. if you want to do Facebook ads for your business, that service would be provided by Facebook from Ireland.
    Same with Amazon, they provide the Amazon advertising from Luxembourg.
    And ebay seller fees come with an invoice from ebay Luxembourg: https://www.haufe.de/finance/haufe-finance-office-premium/ebay-steuerliche-besonderheiten-fuer-unternehmer-4-umsatzsteuerliche-besonderheiten-bei-ebay-auktionen_idesk_PI20354_HI6474790.html
     

That's the DATEV archive DVD, which costs around 40€, plus probably their time applying for it and then sending it to you, see here: https://www-iww-de.translate.goog/astw/sonstige-steuern/gebuehrenrecht-verguetung-fuer-eine-archiv-dvd-bei-mandatsende-f116869?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB&_x_tr_pto=nui,elem

 

Then you had better remain VAT-charging.

And you are opening a whole new can of worms, since Amazon will push you to FBA (fulfilment by Amazon) which means that you have your items in Amazon's warehouses and they merriley shift them between their warehouse in different EU countries, which means that you will need to register for VAT in all these countries. People usually use a service like Avalara to create the VAT announcements in all these countries.

 

You sound naive: selling on Amazon is not something you should do lightly.

Start of reading here: https://www.quaderno.io/blog/how-to-handle-eu-vat-if-you-use-amazon-fba

 

 

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