Question about german tax system (dropshipping)

[HofiKingston]

Hello Guys!

first of all, i'm new at this forum and i love it
So i read some methods about making some bucks online, and the amazon-ebay-dropshipping was the method which was the best one for me personally. Im a student atm, so with this method i could probably make 100-200€ each month, which would help me get through the studium.
I tested this method one week ago, and after some costumations and testings i sold some stuff and made a profit of 11€ in 2 days.

So my question is: the german tax system is really strict, so i have to register a business for this method for sure i think? Now, i'm not 100% familiar with the whole tax system, but after some googling and asking around, i got it like that: if you make over 17.500€ proceeds in 1 year, you have to pay ?revenue-taxes? and after you pass 25.000€ profit im 1 year, you habe to pay ?profit-taxes? (Sorry english aint my native language, i dont know the real terms for that, but i hope you know what i mean)

Now, the thing is, without paying those taxes, i barely gain some profit after ebay and paypal fees, only about 1-2€ each sold article, so if i add at least one of the taxes, i wouldnt do any profit at all.. and with amazon-ebay dropshipping, you will pass the 17.500€ proceeds in 1 year pretty easily (or am i wrong with this?)
I looked up, there are hundrets of german amazon to ebay dropshippers on ebay, who surely sell at least ten tousands of articles each year, so i dont understand how this is profitable for them with ebay+paypal fees and those taxes?
Could someone light me up please? Thanks alot

 

[asmss]

Hey,

Deutschland ist echt ein wahnsinn, was Steuern angeht, aber glücklicherweise musst du dich auch hier bei kleinen Umsätzen nicht besonders vorsehen. Bis 17.500 bist du kleinstunternehmer und muss kaum etwas zahlen.

Mein Tipp daher: konzentriere dich auf dein business. Sobald du siehst, dass dort langfristig Geld rein kommt, gehe als erstes zu einem richtigen Steuerberater, denn nur der kann dir wirklich helfen.

- - my apologies to everyone who does not speak German - -

 

[Aladdin_]

Hello Guys!

first of all, i'm new at this forum and i love it
So i read some methods about making some bucks online, and the amazon-ebay-dropshipping was the method which was the best one for me personally. Im a student atm, so with this method i could probably make 100-200€ each month, which would help me get through the studium.
I tested this method one week ago, and after some costumations and testings i sold some stuff and made a profit of 11€ in 2 days.

So my question is: the german tax system is really strict, so i have to register a business for this method for sure i think? Now, i'm not 100% familiar with the whole tax system, but after some googling and asking around, i got it like that: if you make over 17.500€ proceeds in 1 year, you have to pay ?revenue-taxes? and after you pass 25.000€ profit im 1 year, you habe to pay ?profit-taxes? (Sorry english aint my native language, i dont know the real terms for that, but i hope you know what i mean)

Now, the thing is, without paying those taxes, i barely gain some profit after ebay and paypal fees, only about 1-2€ each sold article, so if i add at least one of the taxes, i wouldnt do any profit at all.. and with amazon-ebay dropshipping, you will pass the 17.500€ proceeds in 1 year pretty easily (or am i wrong with this?)
I looked up, there are hundrets of german amazon to ebay dropshippers on ebay, who surely sell at least ten tousands of articles each year, so i dont understand how this is profitable for them with ebay+paypal fees and those taxes?
Could someone light me up please? Thanks alot

Hello @HofiKingston,

I'm in the same situation as you today in 2020, it's been 3 years since you posted your question, I'd love to hear about your experience with it, Did you find answers? (Funny thing is I'm also currently making 100-200e from eBay and I wish to know more about the taxes in Germany).
Thank you.

 

[Krise656]

You have actually after the business registration 2 possibilities, how you can / want to be taxed.
Either as fully liable to VAT, or as a small business owner.
Prerequisite for a small business is that your annual turnover is less than 22,000 EUR (and, for the sake of good sense, remains so in the long term). In this case, VAT is not charged and you can issue invoices without VAT.
Since you are a Dropshipper and (probably) have your goods delivered from abroad, you cannot have VAT (Vorsteuer) refunded by the tax authorities. Therefore, the variant with full VAT liability would increase the price of your goods by 19% and you would have to submit VAT advance returns (Umsatzsteuervoranmeldungen) regularly.
Regarding income tax, you only have to pay tax on the profit, i.e. minus all costs (have fantasy!!!). Your tax-free amount here is 9.408 EUR in 2020 if you are single and childless.

 

[Aladdin_]

You have actually after the business registration 2 possibilities, how you can / want to be taxed.
Either as fully liable to VAT, or as a small business owner.
Prerequisite for a small business is that your annual turnover is less than 22,000 EUR (and, for the sake of good sense, remains so in the long term). In this case, VAT is not charged and you can issue invoices without VAT.
Since you are a Dropshipper and (probably) have your goods delivered from abroad, you cannot have VAT (Vorsteuer) refunded by the tax authorities. Therefore, the variant with full VAT liability would increase the price of your goods by 19% and you would have to submit VAT advance returns (Umsatzsteuervoranmeldungen) regularly.
Regarding income tax, you only have to pay tax on the profit, i.e. minus all costs (have fantasy!!!). Your tax-free amount here is 9.408 EUR in 2020 if you are single and childless.

Thank you for the clarification!

 

[Dictator95]

Hello everyone, I am an international student in Germany and want to start a small drop shipping business to earn some extra cash. I am very confused about the whole VAT situation. If I drop ship items from say AliExpress (China) and sell the items here in Germany or any other EU country, do I have to pay the VAT or not?
Also, what about the sales tax, income tax and business registration in this case?
PS its been 2 days since I learned about the drop shipping business. Any guide regarding drop shipping will also be very helpful.
Thanks in advance

 

[Krise656]

Please read the above post.
In your situation ("small drop shipping business") I would prefer registering a "small business" (can mostly be done online at your city). Then you have to fill a horrible form from tax authorities (comes offline via post).
Now you need not care about VAT as long as your annual turnover is less than 22,000 EUR (just a blabla you have to write in your invoice, so the buyer knows you are are "small business"). You don't have to pay sales tax, as the tax exemption for "Gewerbesteuer" in 2020 is 24.500 EUR.
You have to pay income tax, but your (personal) tax exemption is 9.408 EUR (turnover reduced by all necessary costs).
Sound more complicated than it is.
Good luck

 

[macomber]

The German authorities are struggling in some places to understand the dropshipping business. I'm not advising you to ignore the laws, but the truth is: If you are not even making 10k revenue per annum, you can get away with a lot (VATs across Europe are a mess). People at the Finanzamt have bigger fish to fry and if you don't piss them off on purpose, are organized, forthcoming and open about your numbers, they'll let you know if they disagree with something. Just don't give them the wrong numbers.
That being said:
Check your city's website for "Gewerbeanmeldung". That's what you technically need to start. It's pretty straight forward. After submitting that form, they forward your data to your local Finanzamt. They'll get in touch with you.
As with taxes, you have two options, as other users told you:
1. You pick the "Kleinunternehmerregelung" for your business. This frees you from the entire VAT-process. You still have to deliver invoices to your customers but you don't add VAT. Simple as that.
2. You go the "normal" way and have to add VAT.

What are the pros and cons?
If you don't need to deal with VAT, you'll save time. Otherwise, you have to submit a form on a monthly/quarterly basis and you have to make VAT-down-payments. The down payments can be a pain in the ass, depending on the nature of your business.
But since you are buying the goods with VAT included you are not allowed to discount that VAT. So you are dealing with "net values" all the time. This shouldn't matter in you business, but it can make sense to think about it if you plan to operate B2B.
As far as I know, you can still change from "Kleinunternehmerregelung" to "normal" either if you are making too much money or if you decide you want to. The other way round doesn't work.
So starting out with "Kleinunternehmerregelung" sounds reasonable to me.
Still, it's very important to have rock-solid documentation: You need a correct invoice for every purchase and every sale. If there are any hiccups with the authorities this will help you. If you can't offer documentation on request, they are going to "estimate" what you owe in taxes. And you don't want to go there...

 

[alaxedk]

What about cryptocurrencies taxes in Germany? I know for a fact if you hold your coins for longer than 365 days once you withdraw them you will not pay taxes. Now the question is what kind of proof do they ask so they "would know" that you held these coins for 1 year? What if you sell your BTC to Tether? Anyone know this?

 

[jason212]

What about cryptocurrencies taxes in Germany? I know for a fact if you hold your coins for longer than 365 days once you withdraw them you will not pay taxes. Now the question is what kind of proof do they ask so they "would know" that you held these coins for 1 year? What if you sell your BTC to Tether? Anyone know this?

I heard that you have to pay taxes but I don’t really know. I also I retested to know more about this ..

 

[jason212]

No one have an idea?

 

[hemd45]

No one have an idea?

Warum bezahlst du Steuern auf Bitcoin?
Geh doch einfach zum nächsten Bitcoin-Automaten und lass dir dort das Geld auszahlen. Solange das keine 100k sind kannst du einfach sagen das du das Geld geschenkt bekommen hast ;-)

 

[Krise656]

Warum bezahlst du Steuern auf Bitcoin?
Geh doch einfach zum nächsten Bitcoin-Automaten und lass dir dort das Geld auszahlen. Solange das keine 100k sind kannst du einfach sagen das du das Geld geschenkt bekommen hast ;-)

Mit Verlaub, das ist eine naive Herangehensweise. Wenn wir über 100€ reden, dann ja. Jedoch wollen größere Beträge in den Finanzkreislauf einfließen (unbar werden) und ein „das ist ein Geschenk“ führt zu einer (mit Recht) Geldwäscheverdachtsmeldung und landet bei deinem zuständigen LKA. 6 Uhr morgens, einmal klopfen, und zwar mit Ramme...

I am sorry for the German. Will be my last post in german here.

 

[hemd45]

Mit Verlaub, das ist eine naive Herangehensweise. Wenn wir über 100€ reden, dann ja. Jedoch wollen größere Beträge in den Finanzkreislauf einfließen (unbar werden) und ein „das ist ein Geschenk“ führt zu einer (mit Recht) Geldwäscheverdachtsmeldung und landet bei deinem zuständigen LKA. 6 Uhr morgens, einmal klopfen, und zwar mit Ramme...

I am sorry for the German. Will be my last post in german here.

cnw

 

[Krise656]

cnw

Chicago and North Western Railway?

Please help me out?

 

[nakamura]

Mit Verlaub, das ist eine naive Herangehensweise. Wenn wir über 100€ reden, dann ja. Jedoch wollen größere Beträge in den Finanzkreislauf einfließen (unbar werden) und ein „das ist ein Geschenk“ führt zu einer (mit Recht) Geldwäscheverdachtsmeldung und landet bei deinem zuständigen LKA. 6 Uhr morgens, einmal klopfen, und zwar mit Ramme...

I am sorry for the German. Will be my last post in german here.

You are right. In the end, it is always about the amount of money...and there is a huge grey area. The same goes for normal banking. If you go to a bank and ask for 20k Euro in cash they will probably think something fishy is going on. On the other hand, no one gives a fuck if you go to an ATM in the main train station with a foreign credit card and get yourself 200€, especially not those international ATMs with a shitload of fees.

By the way, Germany is one of the strictest countries worldwide when it comes to taxes. People in Germany are totally paranoid when it comes to these matters, but you should know: As long as you are not totally messing something up, there is nothing to worry about.