Effect of new German tax-law on Amazon sellers

A new German law obliges cross-border sellers in Germany that sell on marketplaces such as Amazon to take action before 1st October, 2019. Sellers who did not take action to comply with the new regulation will be blocked by the marketplace platform.

Back in 2017, the European Commission proposed new EU-regulations concerning VAT, which should come into effect in 2021. With this regulation, all European web shops have to pay sales tax in the member state from which the buyer originates. According to the current regulation, sales tax is paid in the member state of the seller. While the European commission is working on this regulation, the German government is taking the lead with these plans.

Proactive regulation

In November 2018, Germany’s 'Gesetz zur Vermeiding von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften' was passed. This law was designed by the German government to tackle VAT fraud by online sellers across the border of the European Union.

With this regulation, marketplaces are obliged to guarantee that sellers on their platform pay sales tax. Therefore, platforms such as Amazon and eBay enforce that German VAT-obligatory sellers hand in the 'Bescheinigungen nach § 22f UStG’ certificate before 1st October 2019. This certificate states that a seller is registered in a German VAT-registry. The certificate can be requested at a German tax office. Marketplace sellers that are not obliged to pay VAT need to hand in a declaration which states that they do not need a certificate. If you have not handed in this document, Amazon might remove your selling privileges up to that moment.

In Germany, a cross-border seller is obliged to pay VAT if he meets the following criteria:

• The company is established in Germany, e.g. as GmbH or UG
• Turnover exceeds €100.000 per year in Germany to individuals
• You ship from Germany, e.g. through a distribution partner or through Amazon FBA