Cross-border trade within the EU
Trade within the EU is free from customs and other restrictions. However, goods traded between different EU member states are subject to so-called acquisition tax (Erwerbssteuer).
The reverse charge procedure is in general applicable to intra-community sales of goods and services between entrepreneurs in different EU states. This means that these customers pay VAT on the goods/ services received at the applicable rate in their country. For detailed information about cross-border VAT in the EU please see the dedicated EU website.
Acquisition tax
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Acquisition tax is payable by the recipient of the goods.
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If an EU company exports goods to a company located in another EU member state, the delivering company therefore neither has to pay customs or charge VAT. Accordingly, the company in the other EU member state receiving the goods accordingly has to pay acquisition tax.
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Acquisition tax rates correspond with the VAT tax rates of the country where the recipient of the goods is located. Companies can however reclaim acquisition tax like regular VAT.
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In the case of intra-community deliveries of goods from a company to a private consumer, VAT generally has to paid by the seller in the EU country where the consumer is based, if the delivery is based on an intra-EU distance sale.
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If the EU consumer picks up the goods himself at the seller’s premises in another EU member state, VAT is generally due in the seller’s EU country.
There are various special scenarios that cannot be presented here, for instance chain transactions or the provision of services.
VAT identification number
If a company intends to deliver goods to or import goods from other EU member states, it requires a VAT identification number (Umsatzsteuer-Identifikationsnummer). The VAT identification number application can also be filed online or combined with the regular tax number application. The German Federal Central Tax Office provides initial online information on VAT procedures in Germany.
Online applicationTrade with Non-EU Member States
Goods imported from non-EU states are liable to import VAT called import turnover tax (Einfuhrumsatzsteuer). The import turnover tax rate equals the VAT rates of 19 percent or 7 percent and is paid to the customs authority.
Deduction of import turnover tax
The import turnover tax on goods imported from non-EU states can be deducted as input tax (Vorsteuer). As a prerequisite, the company must have the necessary import documents with customs proof of payment (import declaration).