As Germany is a member country of the European Union, and follow the tax rules of the European Union Value Added Tax Directive. Hence, let’s discuss the EU rules about the tax on digital goods first.

Tax on Digital Goods in Germany

Tax Rules

A general tax rules applied to all European Union countries when selling and buying of any digital goods or services inside or outside the European country. Let’s discuss them below.

Inside EU country

15% to 27% VAT is charged according to the country of a consumer. Whenever any digital goods or services are selling or buying to a consumer resident in any EU country, so in this case, the dealer charged VAT rates on these products according to the country of a consumer.

Outside the EU counter

On the contrary, if any digital product or services are sold or bought from outside EU countries, so in this case 0% VAT charges are applied in both business-to-business (B2B) and business-to-customer (B2C) conditions.

Digital Goods Defined by European Commission

All broadcasting, telecommunications and electronically supplied services that are not physical, automated, IT-based and supplied by internet or electronics are considered as digital goods; defined by EU legislative.

The VAT on Digital Goods

In Germany, if a customer is a resident of it so the VAT is applied according to the country’s rules but if a customer is non-native to Germany so the VAT on these goods is charged according to the country of a buyer.

VAT primarily based at the consumer place

If you’re promoting virtual goods to clients in the EU, then you want to fee VAT based totally on your customers’ place. You can permit the EU Digital VAT Rates function to make this process less difficult.

VAT registration

You can sign up for VAT in one of the following approaches:

  • Register for VAT in each EU country in which you do business.
  • Register for Mini One-Stop-Shop (MOSS) inside the EU country where you stay.

Collecting VAT in Germany

Essentially, you gather VAT by including it to the overall of every sale. When the patron can pay you for your product — voila! You’ve formally collected EU VAT.

Usually, you do price VAT, however, sometimes you don’t. Sometimes it’s at the consumer to deal with VAT. This relies upon whether or not your consumer has a valid VAT variety as a registered enterprise.

Registration for VAT with the German MOSS

Are you registered?. If so, then you usually charge and accumulate VAT on each sale in Germany. All of your “domestic” sales get 19% VAT added to the full. That’s pretty easy.

If not — if you’re VAT-registered in every other EU country, then you only gather taxes on B2C sales. Whenever you sell to a Spanish purchaser who doesn’t provide a VAT variety, you add the tax. If your purchase is a fellow enterprise, and that they’ve supplied a valid VAT wide variety, then including and amassing tax isn’t important!

Tax-exempt regions in Germany

Germany has one VAT-loose spot inside the country. It’s referred to as Heligoland, and it’s an island off the northwest coast. If you promote to any clients who live there, you don’t need to add VAT.

VAT invoices in Germany

VAT invoices are the EU’s sort of tax receipts. They’re the reliable record of the way a good deal tax you charged and amassed, and consequently the legit evidence of ways an awful lot tax you owe the authorities.