Compliance with tax regulations is a central issue for you as an entrepreneur. In this context, sales tax and VAT are of considerable importance in accounting. It should be noted that the terms “sales tax” and “VAT” are used synonymously.
So what about the regulations regarding the invoice to be issued or the accounting when you ship your goods within the EU?
The creation of the EU internal market has brought with it profound facilitation for trade within the now 28 EU states. Things worth knowing and paying attention to will be explained below. Due to the complexity of the topic, only a few aspects can be highlighted.
Accounting for trade within the EU
When making deliveries from one member state to another, when assessing VAT, a distinction must be made as to whether you are sending the delivery with an invoice to a taxable company or to a private individual resident there.
If the delivery is to another company in the EU, you will need both your own VAT identification number and that of your customer. The goods are generally exempt from sales tax in the country of origin (e.g. Germany). They are subject to purchase tax at the recipient in the country of destination.
Private individuals, on the other hand, are subject to different VAT regulations, as they do not pay any purchase tax. In this respect, as an entrepreneur in Germany, you usually have to invoice deliveries of goods to private individuals in other EU countries with German sales tax.
The so-called “mail order regulation” stipulates that the country of destination has priority over the country of origin. This means that if you exceed the delivery threshold, which varies from country to country, you must register for sales tax in the country of destination and settle the sales tax of the country in question.
All deliveries within the EU are duty-free as long as they are so-called “excise goods” such as tobacco or alcohol. The legal basis for accounting in Germany, even when trading within the EU, is the Commercial Code (HGB).
What else you should know
The introduction of the sales tax identification number (VAT ID number), which applies to all EU member states, is intended to simplify the sales tax process in domestic trade.
It is only used between different companies if they have their headquarters in different EU member states. As an entrepreneur in Germany, you can use the VAT ID number. Apply informally at the Federal Central Tax Office in Saarlouis.
You should note that in the case of a delivery transaction between you and a commercial buyer from the EU, both VAT identification numbers must be on the invoice with the additional note: “Tax-free according to Section 4 No. 1b UStG”.
If you are supplying a company within the EU for the first time, you must Check the VAT ID number of the foreign business partner . The Federal Central Tax Office in Saarlouis can also help here if you get stuck in the online form. Please also find out about the so-called Intrastat regulation that could come into play for you.
Summary
Due to simplified regulations within the EU trade in goods, there are not too many things to consider when it comes to accounting, including VAT and invoices. If you are still unsure, it is best to contact your tax advisor or local tax office.
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