Trade representation for Chinese company
September 12, 2012 | 50,00 EUR | answered by Dr. Yanqiong Bolik
Hello,
I have a question regarding value added tax (VAT) and income tax.
If a German citizen residing here works as a sales representative for a Chinese company, selling goods online in Germany (on platforms such as eBay, Amazon, etc.), to what extent must VAT/income tax be paid? To what extent do the sales count towards the representative themselves (small business regulation)?
It is important to note that the goods remain the property of the Chinese company until the final sale, meaning the German seller does not purchase the goods from them, but only imports them. The customs/import tax that must be paid for the import will be included in the salary payment. To ensure transparency, the revenue will always be transferred in full to the Chinese side.
Dear inquirer,
Thank you for your inquiry, which I will gladly answer taking into consideration your input and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of information can change the tax result.
- If a German citizen residing here sells goods online (eBay, Amazon, etc.) as a commercial agent for a Chinese company here in Germany, to what extent must value-added tax / income tax be paid?
a) If the German taxpayer sells goods as an independent business operator for the Chinese company, the commercial agent is not an employee due to his self-employment. In this case, no income tax is to be paid.
b) If the German taxpayer works as an employee (dependent activity) for the Chinese company, then he is not an entrepreneur himself. He does not generate sales and therefore does not have to pay value-added tax. However, the Chinese company in Germany is responsible for withholding and remitting income tax for this employee's salary.
- To what extent do the sales count towards the agent himself (small business rule)? It is important that the goods remain the property of the Chinese company until the final sale, meaning the German seller does not buy the goods from them, but only imports them. The customs / import tax that must be paid upon importation is included in the salary payment. To ensure transparency, the entire revenue is always transferred to the Chinese side.
Value-added tax is applicable when the German individual operates as an independent business operator. In the scenario presented, it is intended that contractual relationships be established directly between the customer and the principal (the Chinese company). The independent commercial agent then only provides intermediary services to the Chinese company. In this case, the commercial agent is generally only subject to value-added tax on his own commission. In this case, there is no salary payment. The commercial agent invoices for his service.
I hope this information has been helpful to you.
If there is still uncertainty, please feel free to use the follow-up function.
Sincerely,
Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
Email: info@zdbz.de
www.steuerberatung.zdbz.de
