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Oh Europe, you and your lovely bureaucratic hurdles

Discussion in 'Ecommerce Forum' started by Federico Parravicini, Feb 22, 2018.

  1. Federico Parravicini

    Federico Parravicini UKBF Newcomer Free Member

    10 1
    So, hello! My name is Federico and I am new to the forum.

    I currently reside in Germany and (I know, no one here is an expert in German law, but this is a more Europe-geared question) I am on the process of opening an eCommerce store with Shopify, initially it's going to work with POD dropshipping, but as soon as we have tested the market we'll begin ordering in bulk and shipping ourselves.

    The issue: I want to be able to sell EU-wide, not just Germany, not just the UK, but most of Europe (although, if I have to pick two, it will be those two). I am a single person and my sale income will most definitely be below the threshold initially, so I am thinking to myself "do I have to charge VAT? Should I register for it, or wait until later? If I don't register for VAT because I am currently below the threshold, then does that mean that I don't need to charge any tax on my EU-customers and can go straight to launch?"

    Oh boy, oh man, if anyone has any idea regarding what I am meant to do with this stuff in order not to get a bite in the ass from the taxation office -again, I know people here don't live in Germany, but tax-wise eCommerce is quite similar throughout the EU-, or how did you guys do it when you started small, I would really, really appreciate your help!

    Thanks!
     
    Posted: Feb 22, 2018 By: Federico Parravicini Member since: Feb 22, 2018
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    7,376 768
    Find out about the VAT in each country, there are differences. Including what is subject to VAT.

    Now, for the UK, are you basing any stock here? If so there is no VAT threshold. If not then the distance selling VAT threshold here is £85k for at least another year. Possibly will drop significantly in a couple of years.

    Some things can be different for businesses based in a country than businesses based outside that country. Like whether the VAT threshold applies.
     
    Posted: Feb 22, 2018 By: Mr D Member since: Feb 12, 2017
    #2
  3. Page

    Page UKBF Big Shot Free Member

    3,461 260
    If your stock is in DE and you send from there throughout the EU - B2C - then you do all your accounting in DE VAT

    I think in DE you are submitting monthly returns

    Worry about the rest if you ever get those volumes

    In which case you will be able to pay for the accounting help you need
     
    Posted: Feb 22, 2018 By: Page Member since: Jul 28, 2007
    #3
  4. The Byre

    The Byre UKBF Ace Free Member

    6,893 2,684
    We have a German subsidiary and every commercial enterprise has to be MwSt (Mehrwertsteuer = VAT) registered. Obviously, occasional income, such as selling a car on eBay, or flogging off some rubbish at a flea-market is not classed as a commercial enterprise. Your company registration and your MwSt registration are one and the same and you are obliged, regardless of the scope of your business, to run a full set of books and pay your MwSt on-line and every quarter - just like the UK.

    These rules apply, regardless of your status. A sole trader (Personengesellschaft) or a Ltd. (GmbH) or one of the many other forms of company must all be MwSt registered.

    The Finanzamt (HMRC) will be able to help you with on-line and paper information and are obliged to assist you to a reasonable extent - just like the UK.

    You will need a registered accountant (Steuerberater) for your annual accounts and in Germany, they are relatively cheap and it is a criminal offence for someone to claim to be a Steuerberater, when they are not fully qualified and registered as such (unlike the UK!)

    If somebody orders goods from outside Germany, you can either charge German MwSt (and pretend that they are in Germany) or they provide you with their VAT number. Many micro-businesses in the UK do not have a VAT number and are not registered. The Finanzamt just does not recognise this and you are obliged to charge either VAT (via the mad EU scheme that, fortunately, we do not have to deal with as we are a B2B-only in Germany) or treat them as German retail customers and charge MwSt.

    The treating of non-German retail customers as Germans is not strictly kosher, but the Finanzamt turns a blind eye to this (as long as you don't actually tell them!!!) and many companies are forced to do this, as the EU system is just too complex for smaller players.
     
    Posted: Feb 22, 2018 By: The Byre Member since: Aug 13, 2013
    #4
  5. Federico Parravicini

    Federico Parravicini UKBF Newcomer Free Member

    10 1
    Hey! No, initially I will be using a UK based company to drop ship my products, but after the testing period I will cease that and start ordering in bulk to do the shipping myself and increase profit!

    May God hear you! Haha, it's truly something I look forward to, as I haven't been able to focus on the actual business itself for days now with all this legal and taxation wall

    Are you sure about that now? I've been told that if you start as a small company (Kleinunternehmen) and your sales are under a certain threshold (17.500 euro yearly) you need not charge tax, it is still possible and even recommendable if you have a lot of expenses with VAT added, but up until you get past that number (which I know is low, but for a not-even-existing business, is considerable) you don't have to worry about said taxations.

    Ah, really? I will write a list of the most alarming questions then and write them and hopefully, they'll do something other than just steer me away haha

    I have heard this and as long as I stay under the 35k threshold of some countries (albeit, higher for others), I should be fine! And then I'm also pretty sure that if I sell overseas, I don't have to charge VAT (once I have that VAT number, that is)


    Great replies guys! This seems like a helpful group of people! Not many forums of such nature out there!
     
    Posted: Feb 22, 2018 By: Federico Parravicini Member since: Feb 22, 2018
    #5
  6. Mr D

    Mr D UKBF Legend Free Member

    7,376 768
    Yes if you sell outside the EU, such as the channel islands or USA etc then you don't charge them VAT.
     
    Posted: Feb 22, 2018 By: Mr D Member since: Feb 12, 2017
    #6
  7. The Byre

    The Byre UKBF Ace Free Member

    6,893 2,684
    1. You can earn a certain amount as a casual unregistered trader.

    2. German officialdom works only in German. If you do not speak German, you will struggle. Some effort is made for those of refugee and/or asylum-seeker status, but the system basically requires any business person to be a fluent German speaker.
     
    Posted: Feb 23, 2018 By: The Byre Member since: Aug 13, 2013
    #7
  8. Federico Parravicini

    Federico Parravicini UKBF Newcomer Free Member

    10 1
    I think I'm quite alright with my German, not the best, but so far I've been able to do most of the stuff I have to, painstakingly and all haha
     
    Posted: Feb 23, 2018 By: Federico Parravicini Member since: Feb 22, 2018
    #8
  9. antropy

    antropy OpenCart Experts Full Member - Verified Business

    2,926 498
    Yeah EU VAT is an absolute nightmare. All I can recommend is that you begin campaigning for "Germexit" :D
     
    Posted: Feb 26, 2018 By: antropy Member since: Aug 2, 2010
    #9
  10. Federico Parravicini

    Federico Parravicini UKBF Newcomer Free Member

    10 1
    Ah, I have the feeling that would make the whole process harder overall and it'd limit me to the German market
     
    Posted: Feb 26, 2018 By: Federico Parravicini Member since: Feb 22, 2018
    #10
  11. antropy

    antropy OpenCart Experts Full Member - Verified Business

    2,926 498
    What makes you say that? Brexit has been working out fine for us so far! Government is in chaos, pound is way down, economy is looking very shaky, and we haven't managed to remove any EU legislation, in fact more (GDPR) is being passed in to law as we speak. But still, at least our National Health Service has £350 million more per week ... oh wait :D
     
    Posted: Feb 26, 2018 By: antropy Member since: Aug 2, 2010
    #11
  12. Federico Parravicini

    Federico Parravicini UKBF Newcomer Free Member

    10 1
    I've always found English sarcasm to be enjoyable
     
    Posted: Feb 26, 2018 By: Federico Parravicini Member since: Feb 22, 2018
    #12
  13. atmosbob

    atmosbob UKBF Ace Free Member

    3,118 693
    If a business cannot cope with taxation in all its forms how does it hope to run a business? VAT is one of the easiest taxes to deal with. Wait till you get to income tax, will you plame Europe for that?
     
    Posted: Feb 26, 2018 By: atmosbob Member since: Oct 26, 2009
    #13
  14. antropy

    antropy OpenCart Experts Full Member - Verified Business

    2,926 498
    "Wait till you get to income tax" lol, what are you talking about? I've been doing income tax, autoenrollment pensions etc. for my staff for years but that's nothing compared to:
    https://www.gov.uk/government/publi...pplying-digital-services-to-private-consumers
     
    Posted: Feb 26, 2018 By: antropy Member since: Aug 2, 2010
    #14
  15. RSR Fulfillment (FR & DE)

    RSR Fulfillment (FR & DE) UKBF Regular Free Member

    136 13
    I live in germany and have a shopify store, on the border to France actually. We set up a German company last year but are mothballing it this year and will trade as a UK company with a German warehouse.

    The German accountancy industry is a disgrace. They have sorted themselves out so that, if you don't do it yourself (and I can't) only German accountants can submit your VAT and year-end accounts. And certified / low-end accounting does not really exist. it's the full-fat chartered version or nothing. Consequently you get a royal bumming on fees. 70 euros per hour for book-keeping and 100 euros per hour for management to look over the work. I found one for 60 but she can't speak English. And I can't speak german, as I am actually moving to France...and can speak french.

    And they never once tell me how to bypass a law or get a perk here and there. it was always 'you must pay ziss tax immediately' or ' you are not allowed to do zat, it is not legal.'

    Anyway, my VAT payments were about 1500 euros per month and my accountancy fees were about 700. They like to go through things slowly as they are raping you on basic book-keeping.

    I tried to get one of these online VAT return companies to do it for the advertised 125 euros per month but they were not allowed because the company is German. And that is why we have opened a UK company, to get cheap accounting. That is the only reason. Well done, German accountants, you tossers!

    To answer one of your questions, you are not allowed to trade over 17,500 euros per year without submitting VAT returns. i still think you need to register.
     
    Last edited: Feb 26, 2018
    Posted: Feb 26, 2018 By: RSR Fulfillment (FR & DE) Member since: Dec 8, 2017
    #15
  16. atmosbob

    atmosbob UKBF Ace Free Member

    3,118 693
    Significantly even cheap accounts packages can prepare a VAT return but I have yet to find a software package which can deal with Income Tax in the way that a good accountant can.
     
    Posted: Feb 26, 2018 By: atmosbob Member since: Oct 26, 2009
    #16
  17. Federico Parravicini

    Federico Parravicini UKBF Newcomer Free Member

    10 1
    Is this your first shopify store? Because it would be for me and one of the reasons I came to Germany was to start doing business, but it seems you think it isn't a great place to do it.

    Damn, I think I'll have to do EÜR for the beginning then, just good old Excel sheets to get started

    That does seems high, but then again, I haven't even started the business yet... Hmm
     
    Posted: Feb 26, 2018 By: Federico Parravicini Member since: Feb 22, 2018
    #17
  18. RSR Fulfillment (FR & DE)

    RSR Fulfillment (FR & DE) UKBF Regular Free Member

    136 13
    Yes first shopify store, used Big Commerce before that. But they did not have any free German themes and shopify did.

    Germany is a great place for sales....bad for bureaucracy.

    Also DPD is good and cheap.
     
    Posted: Feb 26, 2018 By: RSR Fulfillment (FR & DE) Member since: Dec 8, 2017
    #18
  19. Mr D

    Mr D UKBF Legend Free Member

    7,376 768
    You presumably don't deal with VATMOSS? Or a small sale that requires better part of a day registering to pay a tiny amount of VAT to a government?
    Or have to figure out if your product is subject to VAT in a particular country?

    There are easier taxes than VAT. For VAT beyond your own country its common enough to pay a specialist to handle it.
    Business owners aren't expected to know all about all the taxes. They are expected to know some stuff and use specialists / professionals for what the business owner does not know.
     
    Posted: Feb 26, 2018 By: Mr D Member since: Feb 12, 2017
    #19
  20. RSR Fulfillment (FR & DE)

    RSR Fulfillment (FR & DE) UKBF Regular Free Member

    136 13
    I find the corporation tax the easiest. if I don't like the figure just devalue the stock!
     
    Posted: Feb 26, 2018 By: RSR Fulfillment (FR & DE) Member since: Dec 8, 2017
    #20