Ask a tax advisor on the topic of Sales tax / Turnover tax

German mail-order company also ships from the UK.

November 7, 2012 | 40,00 EUR | answered by Oliver Burchardt

Hello,

the following situation:
Legal form: As a German sole proprietor, I operate a mail order business in Germany.

In addition, I want to have goods that I purchase in the UK from a British company sent directly to German, Spanish, and French end customers through a logistics service provider in the UK.

There are no employees, accounting, or similar in the UK. Everything is managed from Germany.

a) Am I correct in assuming that I am not establishing a permanent establishment in the UK, therefore falling under the provisions of the double taxation agreement with the UK Article 5 No. 4?

b) Which VAT do I have to invoice for the deliveries from the UK to Germany, Spain, and France? The German or the British VAT? I would stay below the delivery threshold for each delivery from the UK to Germany, Spain, and France.

For France, this would also apply to the total deliveries, so for the sum of turnover from the UK warehouse and the German warehouse.

For Spain, I would stay below the delivery threshold for each turnover for shipping from the German warehouse and the UK warehouse, but for the total turnover - sum of shipping from the German warehouse and the British warehouse - I would exceed the delivery threshold. In this case, do I have to invoice the Spanish VAT to Spanish customers?

In Germany, of course, I am already exceeding the 100,000 euro limit with shipments from Germany.

Oliver Burchardt

Dear inquirer,

Thank you for your inquiry, which I am happy to answer as part of an initial consultation.

I also do not see a permanent establishment in the UK. You only purchase goods there, which are then sent on by another company commissioned by you.

From a VAT perspective, however, you always deliver from Germany. Here, you are entering into a so-called chain transaction. VAT-wise, your supplier first delivers the goods to you, and then you deliver the goods to the end customer.

Therefore, you must calculate the delivery threshold for all deliveries you make to the respective country. Since the place of delivery is where the end customer receives the goods, you must invoice the VAT of the customer's country of residence.

I hope this information helps.

Best regards,

Oliver Burchardt
Tax consultant