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THRESHOLD CASE

The EU member states have established delivery thresholds in connection with the so-called mail-order business regulation.

The mail-order business is the sending or handling of items via the supplier to private customers. On exceeding the delivery threshold, the delivery to private individuals is liable to VAT (value added tax) in the country of destination and not the country of origin. In this case the entrepreneur must register regarding VAT with the tax authority in the country of destination. The delivery threshold for sales to German private individuals is €100,000 p.a. and on exceeding the threshold, it is compulsory to be VAT-registered in Germany.

Delivery threshold

The delivery threshold defines the value of goods minus the tax amount (Entgelt) in the previous or current calendar year, up to which the sending or handling of deliveries to private individuals of the relevant member state may be invoiced with the tax rate of the country of origin. If this amount is exceeded for consignments of goods to private individuals, the supplier must register for VAT in the country of destination and invoice with the VAT rate of the country of destination. The delivery threshold does not apply to the delivery of new vehicles and goods liable to excise duty such as petroleum, alcohol or tobacco. 

If the supplier doesn’t exceed the delivery threshold, it can waive the use of the delivery threshold and opt for regulation by applying to register for VAT in Germany. In this case it calculates using the German VAT rate and is committed to the application for two calendar years. The application to waive the delivery threshold can be made without a form and without notice and is to be sent to the responsible tax authority in Germany. This application may, for example, be useful when the VAT rate is lower in the country of destination than in the country of origin.

Summary of the most important details

  • There is an obligation to register in Germany on exceeding the delivery threshold.
  • The delivery threshold in Germany amounts to €100,000 p.a.
  • There is the possible option to register in Germany voluntary.
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