Since July 1, 2021, new regulations on VAT apply in EU-wide mail order business. In the following, we would like to provide an overview of the effects this has on your tax liability and, furthermore, what this means for the indication of prices.

Introduction of a uniform delivery threshold

Prior to the VAT reform, turnover from shipments to other EU countries only had to be taxed there if the turnover in this country exceeded a certain so-called delivery threshold.

Example 1: You operate an online shop and sell smartphones to end consumers throughout the EU. You earn EUR 50,000 from your sale to France and EUR 20,000 from your sale to Spain. Under previous law, delivery thresholds of EUR 35,000 applied in both France and Spain. This meant that the trader had to pay tax on his turnover from France up to EUR 35,000 in Germany, while the remaining EUR 15,000 was taxable in France. With regard to his turnover in Spain, the entire turnover was taxable in Germany.

This system was abandoned in favour of a uniform delivery threshold of EUR 10,000. If this threshold is exceeded, you must pay the corresponding turnover tax in each country to which you send goods.

Example 2: The trader from example 1 based in Berlin has expanded his online shop to the EU since January 2022. The total of all EU cross-border deliveries of goods to consumers amounts to EUR 9,750.00 (net incl. shipping costs) by 17.3.2022. On 18.3.2022, he receives an order for a smartphone from a consumer in Spain at a net price of EUR 300. Already for this first delivery exceeding the threshold, the VAT of the destination country is due (in our example, the Spanish VAT of 21%). In addition, all subsequent deliveries are also subject to the VAT rates of the destination countries, provided that the buyers are consumers.

Which sales are taken into account?

The decisive factor for exceeding the delivery threshold is the sum of all shipping purchases to consumers in other EU countries, including shipping costs. In addition, electronic services (including downloads) are also included if the consumer is resident in another EU country.

Important: If you have exceeded the delivery threshold in year x, the VAT liability applies to every delivery in year x+1. The trader from example 2 therefore already has to pay tax at the foreign tax rate on the first order to the EU country he sends in 2023.

How is the tax declaration made abroad?

So that traders do not have to register for tax in every country, the Federal Central Tax Office has set up the so-called One-Stop-Shop (more information here

). The taxes declared in the OSS procedure are forwarded by the BZSt to the respective country.

Important: An exception applies if you use cross-border fulfilment structures, the use of the OSS for the related transactions is not possible.

How do I display my prices in the online shop?

According to the EU Price Indication Regulation, prices to consumers must be indicated inclusive of VAT. For a French consumer, a product must therefore be displayed including 20% VAT if the delivery threshold has been exceeded. The same product in Germany must be displayed including 19 % VAT. The technical solution can be realised, for example, by setting up sub-shops for each target country or by querying the target country when calling up the website.

Attention: Due to the prohibition of discrimination in the Geoblocking Regulation, you may not charge different net prices for the same product based on the country of residence. Accordingly, the different VAT rates can only be taken into account by adjusting the gross price. A smartphone that is offered in Germany for 200 EUR (incl. 19% VAT) must be offered to a Luxembourg buyer for 196.63 EUR. Since only a VAT rate of 17 % applies there. Otherwise you would unlawfully charge a higher net price for the smartphone.