Starting a business in online retail - residence in an EU country
December 29, 2010 | 30,00 EUR | answered by Oliver Burchardt
Dear Sir or Madam,
I am a German citizen with a permanent residence in Greece, but I would like to register a business in Germany in order to operate an online store (E-bay). Is this possible, or is a residence in Germany mandatory?
If a residence in Germany is required, could I register in Germany to handle everything there through the registered address, but still live in Greece?
The goods would be officially purchased in Greece and sold in Germany (or possibly all of Europe). Is it correct that there are no further tax implications when selling the goods in terms of import (shipping from Greece to the sales address in Germany), as the goods are already taxed by my wholesaler in Greece and tax payments to the German state would be made by me later (with a business in Germany)?
Thank you in advance, Yours faithfully
Dear questioner,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
Please note that the tax assessment is based on the information provided. Changing, omitting, or adding information can affect the tax assessment.
Registering a business is only possible where the business is actually operated. If you operate your business from Greece, you must also register it there. However, as a Greek entrepreneur, you can also register a branch in Germany, allowing you to register a business in Germany as a result.
The tax situation needs to be separated.
From an income tax perspective, this is a case of international tax law, so the regulations of the Double Taxation Agreement between Germany and Greece are applicable. According to Article III, the right to tax commercial profits in your case initially lies with Greece as your place of business. However, the profits of the German branch only trigger taxation in Germany, so you have to fulfill income and trade tax obligations there.
From a VAT perspective, you initially supply your German branch from your Greek place of business and have to declare an intra-community acquisition and pay the resulting VAT to the German tax authorities. However, this VAT is deductible as input tax. At the same time, you can also claim the VAT amount paid in Greece for goods received there as input tax (assuming that Greece has implemented the corresponding EU regulations into national law).
In the second step, you then supply the end customer from your German branch from a VAT perspective. This is also subject to VAT in Germany, which you must pay to the German tax authorities. If you supply goods from Germany to another EU country, the situation becomes more complicated and depends on the specific circumstances and your customer base. It is not possible to provide meaningful advice on this in such a forum.
However, I recommend that you consult a Greek tax advisor before starting your activities to discuss possible consequences under Greek income tax law.
I hope to have given you an overview of the legal situation within the scope of your inquiry.
Best regards,
Oliver Burchardt
Tax Advisor
