New rules from January 1, 2020:
Sellers must declare B2B cross-border duty-free within the EU in the country of shipment. In the rest of the EU it is called the intrastate declaration; In Germany it is called ZM Declaration (Zusammenfassende Meldung in German). Special reminder: when registering VAT in Ambo Accounting firm, I also help to make ZM declaration for free.
When an e-commerce seller generates an EU B2B cross-border duty-free sales order, they must submit not only the normal VAT declaration, but also the intrastate declaration in the EU (called ZM declaration in Germany). If one party declares, the other party does not declare, the tax bureau of the party who did not declare may regard the order as a B2C order, according to the tax rate of the country of issue for taxable treatment.
At this point, maybe many sellers do not know what is B2B cross-border sales and declaration within the EU, let's first use examples to understand.
1) Examples of cross-border B2B sales:
The Amazon seller opens Amazon Business, and the goods are stored in the FBA warehouse in Germany. The enterprise buyers from other EU countries buy these FBA goods on the Amazon platform. If the goods are sent from Amazon's FBA warehouse in Germany to another EU country, then the transaction is duty-free. This is B2B cross-border duty-free sales within the EU.
2) Examples of cross-border B2B sales declaration:
An Amazon Luxembourg company invokes an AD/service invoice to an Amazon Germany site seller, i.e., a cross-border B2B service sale.
If Amazon Luxembourg makes the cross-border B2B sales declaration of this service, the tax number of the corresponding country of the Amazon seller shall also make the cross-border B2B purchase declaration of the corresponding amount. The VAT rate of this sales is 0, that is, only the tax declaration is 0, and no tax is required.
In other words, Amazon sellers are required to declare cross-border B2B sales, and corresponding EU enterprise sellers are required to declare cross-border B2B purchases of the same amount.
To operate in Germany, you need to know the German ZM declaration. Late or incorrect submission of ZM returns may result in a €5,000 penalty.
Declaration time
Tax declaration in Germany is required before the 10th day of each month.
What does the German ZM declaration contain?
1) B2B cross-border transactions.
Germany requires sellers engaged in cross-border B2B transactions to make a B2B cross-border tax exemption declaration within the EU, known as ZM declaration.
2) Customs clearance deferred.
The consignees using the extension method must declare their INTRASTAT purchases in the country of destination, and the Customs Office strictly tracks where these goods go under the VIES VAT information exchange system. INTRASTAT who fails to declare will be fined.
3) About warehouse removal.
Although this is not an actual B2B transaction, the tax numbers for different countries are independent of each other and therefore need to be submitted.
Recently, our accountant in Germany received a letter from the Internal Revenue Service of Germany, involving almost all of our clients. We suspect that the next step may be for the IRS to aggressively investigate the filing of deferred data and 0 tax rate cross-border invoices.
The contents of the letter are mainly for the following two situations:
1) Companies from other EU countries provide services to customers;
2) Do a deferral through other EU countries and ship the goods to Germany.
The first case: 0 tax rate transnational invoice class
Companies from other EU countries provide cross-border B2B services to sellers. If the company has made the corresponding cross-border sales tax 0 declaration in the host country, the seller must also make the corresponding cross-border purchases tax 0 declaration in the corresponding host country.
For example, if Amazon Luxembourg provides logistics, advertising or agency fees and other services for the seller's German site, and Amazon declares the corresponding service sales in Luxembourg, the seller is also required to declare the corresponding purchase in Germany, and the tax rate is 0.
Before this, we are not sure whether Amazon has made this service cross-border sales declaration, and most sellers have not taken the initiative to make corresponding purchase declaration. However, I recently received a letter from the National Tax Bureau, suggesting that the seller can take the initiative to correct.
In the second case: customs clearance deferred C88
If the goods are delivered to Germany through customs clearance deferred through other EU countries, the freight forwarders in other EU countries will make duty-free sales declaration. But the customer must also make the corresponding purchase declaration in Germany.
At present, many customers either do not make the corresponding declaration or only make a small amount of declaration.
Therefore, the German tax office requires customers to self-check, if found underdeclaration of the above two cases, what should be done?
How to deal with underreporting?
It is suggested to make amendments on the corresponding German annual statements, especially the declaration of procurement with zero tax rate within the EU in 2022.
Note: Failure to amend may result in the tax Bureau being required to pay tax on taxable sales, including normal deferrals, warehouse removals and invoices for services rendered by Amazon to customers.
That is to say, the German tax bureau may count the 0 tax rate purchase sales within the EU in the above two situations as taxable income, requiring that the tax be paid in accordance with 19%.
Amber Accounting firm provides professional one-stop cross-border tax service, can help you understand the details of Germany's EU declaration, and ensure your declaration compliance; Assist you to sort out the bills, fill in the declaration form, and complete the declaration in time.
In conclusion, the German tax office attaches great importance to the EU declaration. We suggest that you understand and comply with relevant regulations as soon as possible. If you need any help or consultation, please feel free to contact us, we will provide you with professional services and support, to ensure your declaration compliance.