Registering for VAT in Germany - recommendations?

[SeanOF]

My business sells on Amazon and following Brexit we now need to hold stock in the EU so we can ship more efficiently to EU customers. This means we need to register for VAT in an EU country - and we think Germany is probably the most suitable - but this process seems very difficult so I was wondering if anyone could recommend a firm to help.

I've already spoken with Avalara (who seem very expensive and probably too big for us), SimplyVAT (I'm not getting a good feeling for these guys and they're also not cheap) and HelloTax (lowest cost but it feels like the price is there for a reason) so can anyone recommend someone other than these three?

I'd also be very grateful to hear from anyone who has been through this process and may be able to offer any additional advice on problems we may encounter. Thank you.

 

[ServWise]

I would have thought Ireland would be the obvious choice for registering for VAT being English speaking and probably much more aligned to the Uk in terms of procedures. (Maybe I am wrong) although I guess a lot of other EU countries will have their systems in English as well as their main language.

 

[Mister B]

We used Meridian in Dublin, for the very reasons that ServWise states. However, they were horrendously expensive.

We now use Avalara for all of our EU tax filings, (six in total,) and the annual cost equals the same amount that we were paying Meridian for DE only. As the Americans say, do the math and go figure!

Look into the Amazon pan eu promotion but be warned, it is a real can of worms especially at the moment.

 

[SeanOF]

I would have thought Ireland would be the obvious choice for registering for VAT being English speaking and probably much more aligned to the Uk in terms of procedures. (Maybe I am wrong) although I guess a lot of other EU countries will have their systems in English as well as their main language.

My understanding is that as we intend to hold our stock in Germany then we need a German registration and an Irish one won't do. I don't believe Amazon have any European fulfilment centres in the Irish Republic.

 

[The Byre]

1. Germans speak German and all paperwork is in German. Fortunately, Google translate can do what it says on the tin for all the online stuff and that is pretty much everything. But German customers want to make a call in German to a German in Germany and buy from a company that is in Germany, both legally and physically.

2. Any Steuerberater (accountant) can help you set up an accommodation address or deal with most other formalities.

3. Registering for MwSt (VAT) is just that - you register. It is all part of the process of registering your company or enterprise. All commercial enterprises that are more than just profitable hobbies MUST register for MwSt. You have a bewildering choice of company structures and you can wrap one structure inside another, but the basic two are Personunternehmen (sole trader) and GmbH (Ltd).

4. The great thing about German bureaucracy is that it functions and is 'absolute'. i.e. no grey areas. And no closed loops like in Russia where A sends you to B who tells you to go to C who redirects you back to A. Or open strings that flap loosely as in the UK in some cases where A sends you to B who tells you that C is responsible, but C is closed and D was abandoned in 2012 (but a parliamentary select committee is studying it and will report its findings in a year or two).

5. The key to doing business in Germany is to be in Germany and/or have a trustworthy person or team on the ground. German employees like structure and clarity. British muddling through ain't gonna fly. Structure and control systems have to function and are expected.

 

[Mister B]

My understanding is that as we intend to hold our stock in Germany then we need a German registration and an Irish one won't do. I don't believe Amazon have any European fulfilment centres in the Irish Republic.

My apologies, allow me to clarify: We are not registered for VAT in Eire, we merely used a business based in Dublin to handle the registrations and file the returns on a monthly basis.

 

[SeanOF]

Some great comments here - thank you to all - but I am still looking for a recommendation of someone (other than Avalara, SimplyVAt or HelloTax) that can handle these returns for us at a reasonable price. Please let me know if anyone can vouch for someone to do this please.

 

[The Byre]

I've sent you a PM.

 

[Pish_Pash]

Same issue here ...I'm hearing 6 months to get registered using Avalara.

I'll probably just pay some bloke at home watching German daytime TV who advertises "I get you German VAT ID" on Fivver to keep himself in pot noodles.

(a couple of years ago, I had a pop at this...downloaded the pdf form, tried to use google translate .....not good at all, I can't help feeling it'll all go Pete Tong if flying solo).

The next challenge ...entering/tracking German VAT into your UK books (which has one VAT Control account ...in sterling)....whenever I want to mess with my mind, I research up that one on the Net.

 

[Spur Support Services]

If you are on Amazon, see if you qualify for the free 12 months deal
https://services.amazon.co.uk/servi...esources/external-tax-services-promotion.html

The Amazon VAT Service uses Avalara and the Registration process is performed through your Amazon Seller area. Just don't forget that if you sell through other platforms as well, you will need to send that additional information to the "Amazon VAT Service" separately for each reporting period.

However, you'll get free German VAT Registration and free returns for 12 months, so it will be cheapest way.

 

[The Byre]

I'll probably just pay some bloke at home watching German daytime TV who advertises "I get you German VAT ID" on Fivver to keep himself in pot noodles.

That is one way to lose your shirt and lose all sales to Germany, I suppose.

The viability of an import-export agency dealing with SMEs -

We had a big pow-wow with international Zoom calls and all, yesterday evening on this very subject and the conclusion, after listening to people who know about these things, was that below a certain level, probably a mid-seven-figure gross turnover with the EU, it would not be worth-while providing a service for UK customers in Germany.

I argued that there is money lying on the ground, waiting to be picked up. The person who used to run an entire customs operation for a larger international corporation disavowed me of that sentiment in no uncertain terms. The only way to move products to retail customers in the EU is to have a proper and genuine company in the EU and to have a physical presence in the EU with a team, telephones, etc.

That means hiring an experienced customs and import-export specialist (Speditionskaufmann) to run that team and train them. That person alone would set you back c.a. £80,000 p.a. with payroll taxes, Christmas bonus, pension rights, etc. Add the team and we would be looking at a set-up cost of at least £1m, probably more. And all that for an unproven need that may go away at the stroke of a political pen.

Another hurdle would be money. Germans have learned through bitter experience to not trust UK companies, so any fees or other obligations such as duties would have to be paid in advance.

Worse still, any liabilities such as import duties allegedly paid on such items as computer chips or anything else that attracts customs duties would and could only be paid in Germany as a UK bonded warehouse and/or duties paid in the UK would have no legal status in Germany. That means a security bond (e.g. cashier's cheque) would have to be deposited with a notary-public in Germany if any duties were claimed to have been pre-paid.

Two hours of discussions and the raising of objections and details in the murky world of customs and excise duties and all the formalities that go with them told me that SMEs are, for now at least, out in the cold - so it's Amazon's scheme or they will have to find ways of paddling their own canoes.

If you are on Amazon, see if you qualify for the free 12 months deal
https://services.amazon.co.uk/servi...esources/external-tax-services-promotion.html

That would appear to be the only viable option.

 

[SeanOF]

If you are on Amazon, see if you qualify for the free 12 months deal


The Amazon VAT Service uses Avalara and the Registration process is performed through your Amazon Seller area. Just don't forget that if you sell through other platforms as well, you will need to send that additional information to the "Amazon VAT Service" separately for each reporting period.

However, you'll get free German VAT Registration and free returns for 12 months, so it will be cheapest way.

Thank you for this suggestion. I am aware of the Amazon offering but I'm nervous about going with them as it would become another reliance my business has on them and I already feel they have too much sway in our commercial outcomes. I'll be candid and also say I don't really like or trust Amazon and while the "free" bit is tempting, I've been in business too long to know that "free" rarely is that and more often it's worth paying to have a professional do something right.

That's what I'm trying to do here and so the search goes on.

 

[SeanOF]

That is one way to lose your shirt and lose all sales to Germany, I suppose.

The viability of an import-export agency dealing with SMEs -

We had a big pow-wow with international Zoom calls and all, yesterday evening on this very subject and the conclusion, after listening to people who know about these things, was that below a certain level, probably a mid-seven-figure gross turnover with the EU, it would not be worth-while providing a service for UK customers in Germany.

I argued that there is money lying on the ground, waiting to be picked up. The person who used to run an entire customs operation for a larger international corporation disavowed me of that sentiment in no uncertain terms. The only way to move products to retail customers in the EU is to have a proper and genuine company in the EU and to have a physical presence in the EU with a team, telephones, etc.

That means hiring an experienced customs and import-export specialist (Speditionskaufmann) to run that team and train them. That person alone would set you back c.a. £80,000 p.a. with payroll taxes, Christmas bonus, pension rights, etc. Add the team and we would be looking at a set-up cost of at least £1m, probably more. And all that for an unproven need that may go away at the stroke of a political pen.

Another hurdle would be money. Germans have learned through bitter experience to not trust UK companies, so any fees or other obligations such as duties would have to be paid in advance.

Worse still, any liabilities such as import duties allegedly paid on such items as computer chips or anything else that attracts customs duties would and could only be paid in Germany as a UK bonded warehouse and/or duties paid in the UK would have no legal status in Germany. That means a security bond (e.g. cashier's cheque) would have to be deposited with a notary-public in Germany if any duties were claimed to have been pre-paid.

Two hours of discussions and the raising of objections and details in the murky world of customs and excise duties and all the formalities that go with them told me that SMEs are, for now at least, out in the cold - so it's Amazon's scheme or they will have to find ways of paddling their own canoes.

That would appear to be the only viable option.

Thank you for this detailed comment. I feel, however, that maybe it needs some qualification before determining that *all* SMEs are "out in the cold".

For example, our business turns over less than £1m but the vast majority of what we sell is to the UK, second place is US and then maybe 5-10% is to the EU with much of this going via Amazon's FBA program. In this instance our problem is relatively easily solved (I think) by using an Avalara or SimplyVAT to get us a German registration, ship stock to Amazon Germany and continue selling and serving Amazon clients in the EU like that.

If anyone from the EU buys from our website then they will have to pay the import taxes and VAT in their country and European customers are slowly realising this. As far as I understand the issue, that is "their problem", so to speak, and not an issue we have to concern ourselves with (or am I mistaken in that belief?).

Our business in Europe is so small that I don't think we'll breach the €35,000 annual sales threshold in any market (apart from Germany where we will already have a tax registration) so for the sake of the £2-2.5k a year it takes to engage someone like an Avalara or SimplyVAT to continue to give us easy access to these markets, it seems worth it. The trouble I have is I don't think either Avalara or SimplyVAT with their "pile 'em high" strategy of customer service will do a very good job for us and so I'm keen to find an alternative.

Have I misunderstood our situation? It strikes me that perhaps we are considerably smaller than the institution mentioned in the context of your original comment hence why I suggest the premise of the post needs qualification.

 

[The Byre]

Have I misunderstood our situation? It strikes me that perhaps we are considerably smaller than the institution mentioned in the context of your original comment hence why I suggest the premise of the post needs qualification.

The number one issue we argued and argued over last night was scale. I pointed out that there is money lying on the floor waiting to be picked up and those who have worked in import and export argued that it is like seeing pennies on the ground when all you have to pick them up with is a Bulldozer.

I did ask everyone to keep their little ears open and see if anyone out there is maybe a Speditionskaufmann (or Kauffrau!) who is stuck at home and would like some extra cash on the side setting up such an operation from the ground-up.

Names were mentioned, but none had actually learned that specific field even at journeyman's level, let alone at degree level and with some experience (which is what it would probably need!)

I do not know anything like enough to give you the skinny here - but whoever does such a thing would have to know their way around German contract law, consumer law and all the various import and export procedures which are far more rigorous than in the UK. There's more to it than just having a MwSt number if one wants to actually have an on-the-ground presence in Germany.

One possible way might be to find a suitable 'Handelsvertreter' (legal trading representative) who already fronts similar products in Germany.

A great deal depends on what it is that you are selling - one thing came out of the discussion and that was that nobody wanted to deal with a company who are just importers themselves, especially if they are selling a fairly generic product. For example, if someone is just importing surgical instruments from India or wifi adapters from China, badging them and selling them on, then nobody saw the point of representing such an operation. There are oodles of those already across Europe, some of which are giant companies!

It was a frustrating discussion, involving just one "I told you so!" and one "Well, what did they expect!" (both of which came from my wife!)

At the root of the problem is the fact that every movement of some small item can cause the same paperwork as a container of goods worth a million or more. The established forwarders are busy dealing with companies that need 50 containers of motor-parts moving to Russia every day to worry about a box of cheese coming from England.

 

[Pish_Pash]

@The Byre With Amazon FBA out of Germany...the associated commission/fees are much (much) lower (vs selling to German customers from Amazon FBA UK ....so you don't need the type of turnover you mention to make it worthwhile. Additionally, the advantage of fulfilling out of Germany (vs UK->Germany), is that Amazon customers can use their prime for next day delivery...this will see a huge sales lift.

My DE turnover last year was up 30% ... but I reckon I should be able to double last year's turnover just by using German FBA (vs Amazon UK FBA)

The biggest pain is German VAT...no mainstream UK accounts package tracks VAT in Euros. Amazon are offering Avalara Tax agents free for a year, but frankly the mood music isn't good wrt their service (and it leaps to about £1k per country after the free period expires) ....so I'll probably roll my own German VAT tracking in Euros

(I had an epiphany last night...tracking VAT is just like tracking stock (from a coding perspective)....tracking stock in coding terms is a simple formula .... stock take minus sales plus returns ....and for tracking VAT it will be VAT Return (i.e. start/zeroed out to €0 after submission) plus sales VAT ...minus customer returns VAT (I won't have any purchases in Germany, so don't need to worry about this added calculation)....I already have my code, it just needs tweaking to suit). Somebody really ought to plug this gaping gap in UK accounts software, due the evolution of ecommerce & leveraging on services like FBA selling via Amazon, my VAT accounts software requirements are not disimilar to Microsoft, Apple etc .....multi-country multi-VAT agency, multi- currency.

Re contract law....I get very few returns, but regardless, Amazon handle this for me...I don't see any contact squabbles (or did you mean something else?)

Re VAT registration if you're feeling up to it...

http://www.ofd.niedersachsen.de/download/36913/Fragebogen_zur_steuerlichen_E
rfassung_auslaendischer_Kapitalgesellschaften_Unternehmen_Koerperschaftsteue
r_.pdf

(5 pages ...not quite as bad as I remember....google translate accepts images from a translation perspective, so you could scan each page & have it auto translated)

 

[The Byre]

I looked at the headline and saw that it was specific to the building trade! (Baubranche)

Then on Point 9 - you need a body that can send and receive funds, goods and legal documents - einen Empfangsbevollmächtigten as we call it. You also need either a legal representative such as a trade rep, or an employee of your company.

It's actually a pretty straight-forward form. It's just in German! I had to fill in a far more complex form for my passport. It's a pretty simple form - just that it covers all the bases, but nothing to fret over!

The problem with auto-translate is that it does not lead to an understanding of what the individual terms mean.

Amazon FSB does take care of all the contract law issues as far as I know. (They're always right and you're always wrong!) I was thinking of those selling outside of a platform from their own site.

If you want to use multiple currencies, how about GnuCash? As many currencies and other wrinkles as you can point a stick at! It's a real adult programme, despite being free! The one and only downside is no multiple terminals. Single operator only.

 

[Pish_Pash]

Oops, I linked to the wrong form!

I recall I received a pdf form from them into my inbox...just located it - it's a monster in comparison to the one I erroneously linked to above (& which is why I mentioned it would likely go Pete Tong if attempting myself - all of a sudden the £100 that folks on fivver.com offer to do it for looks good value!).

I can't add a pdf attachment on this forum ...so have uploaded it to a pdf hosting website here...

https://pdfhost.io/v/96YCF9Mr8_Form_SM_Fragebogen_zur_ust_Erfassung_eF_neupdf.pdf

...I received that in my inbox about 2yrs ago, it may be superceded ...you'd best check (it's more just to give a flavour for anyone interested in how much info is needed!)

the form is named Form_SM_Fragebogen_zur_ust_Erfassung_eF_neu.pdf ...& it has over 250 questions! (a google search for that filename yeilds nothing ...so perhaps use the German name which is Fragebogen zur steuerlichen Erfassung einer Körperschaft nach ausländischem Recht (which is quite a short/snappy form title)

 

[The Byre]

It's not a monster! It's just a naughty form!

Nothing there that is intimidating! But plenty there that could bite you in the arse later on if you do not understand the consequences of getting it wrong or giving misleading information! That is why I use (a) someone who knows what they are doing - and (b) a German accountancy partnership. It's called "Not trying to do everything yourself!" (But we've had this discussion several times already!)

I always want help. I try to get help from others as much as I can. I think of it as calling desperately for help! In business circles, it is called delegation!

Obviously, I could fill in that form with relative ease. I could also service my car, put it through the MOT and fix the roof of my house and do my own tax returns. I could do every task going, from painting the company buildings to fixing the fences and digging the sewer pipes. In fact, I am quite a dab-hand at driving a digger!

A normal and intelligent human can learn any task - but that does not mean that a normal human should do every task!

I sent out OP the name of the people that do our tax stuff in Germany. If you want to do things properly . . .

 

[Pish_Pash]

Avalara...well respected tax agents with Global reach (Amazon recommend them...indeed push them) ...a walk in the park for them ...someone asked on the seller fourms how long Avalara are taking to get a VAT ID ....6 months.