Germany is a big online ecommerce market for Amazon and Shopify sellers, however, it is also the most strict customs in the Europe countries. There are many cross border ecoomerce packages shipping from China to Germany which being hold in the local customs due to the tax issue. According to the tax law, goods that are stored and sold for a long time in the local area must obtain the local tax ID and EU tax number issued by the German Taxation Office, fulfill the reporting obligation, and pay the corresponding value-added tax. It is one of the biggest challenge for the ecommerce sellers and companies not located in Germany. The following are 5 custom declare solutions for the products shipping from China to Germany.
Customs clearance using the UK\’s EORI number (Brexit transition period)
Because the EORI number of each country is linked to the registered address of the VAT tax number (the British tax number is delivered to the communication address of the British tax agent and receives C79 and customs letters), it has at least an EU address on the surface, so it can submit customs clearance in its own name declare.
The customs brokers help Chinese e-commerce companies to conduct customs clearance through direct agency without joint liability, that is, to clear customs in the name of overseas companies.
According to logistics companies, German customs have begun not to recognize the UK (tax agent) addresses of such Chinese e-commerce companies. In practice, Chinese e-commerce companies are not allowed to use the UK\’s EORI number for direct customs clearance.
Entrust customs clearance in Germany or the EU as an indirect agent for customs clearance
There are 2 problems when applying germany customs clearance agency for the prodoucts shipping from China to Germany:
Only a few customs clearance companies in Germany are willing to use indirect agency methods (which can be used as an indicator for screening freight forwarding), that is, using their own names to help overseas e-commerce customs clearance and submit customs clearance declarations: The customs duties and import value-added tax caused by the wrong item code are underpaid. Within three years after the customs declaration is submitted, the customs broker (person responsible for customs clearance) shall bear joint and several responsibilities.
The customs brokers do indirect customs clearance, pay customs duties and import value-added tax; the tax bill issued by the customs usually only contains the name of the customs broker, and the information of Chinese e-commerce is missing-the tax bureau does not recognize the relationship between the tax bill and the e-commerce company and does not accept imports VAT deduction request.
There are 2 solutions for the issues:
① When customs clearance is required, the consignee must write the company name of the Chinese e-commerce company with a Chinese address; if the delivery place is a warehouse of a German logistics company, be sure to write c / o. Note that this address is only the delivery address.
② A subsidiary company (Ersatzbelege fuer den Vorsteuerabzug) signs the subsidiary document on behalf of the logistics company / customs clearance agency, which can be used as proof of China e-commerce deduction.
Taking advantage of the loopholes in the customs-As an overseas company, Chinese e-commerce cannot theoretically clear customs in its own name.
However, the exception is: if Chinese e-commerce companies occasionally import, they can clear customs in their own names; and the customs brokers carry out direct agency and do not bear joint and several liability. (In actual operation, the German customs takes 10 times a year as the criterion for judging occasional customs clearance)
That is to say, the reason that overseas companies clear customs 10 times a year.
To sum up accurately: ① A Chinese e-commerce company can import customs clearance 10 times in its own name within a year. ② It is still possible to import into Germany afterwards, but it must be changed to indirect agency mode, and customs brokers are required to clear customs in the name of customs brokers. ——The transition of the responsible party often leads to conflicts between e-commerce sellers and logistics: after the direct clearance limit is used up, the indirect clearance costs, qualifications, and willingness, the freight forwarder / customs clearance agency should prepare sufficient explanation and time.
Deferred customs clearance at the ports of Belgium and the Netherlands.
The Dutch customs brokers are very friendly to overseas companies. The Netherlands is a trading nation and has a large number of customs brokers. It is willing to do indirect agency customs clearance for non-EU companies. If Chinese e-commerce is cleared in the Netherlands, the process is generally as follows:
① Chinese e-commerce must have the German tax ID of the final destination (including the German EU tax number, the so-called e-commerce tax number).
② When the goods are imported into the Netherlands, if the goods do not stop in the Netherlands and are delivered directly to other EU countries, the Dutch customs clearance agency will do it.
③ When importing, only import EU tariffs are paid, and import VAT is exempted. Because this batch of goods is directly imported into the Netherlands and transferred to Germany after being imported into the Netherlands. The Dutch customs clearance agency is required to make a declaration (tax-free declaration) for the sales / issue of goods within the EU B2B, and is therefore exempt from import VAT. (Insert link to previous cross-border B2B tax-free article)
④ Chinese e-commerce companies must make corresponding declarations for the purchase / receipt of goods within the EU in B2B in Germany.
The advantages of this are: first, the e-commerce customer\’s cash flow is very good, and there is no need to pay import VAT; second, the customer does not have the issue of import VAT deduction: because the German tax office often does not recognize the German customs However, there is no tax bill issued by the customs, and there is no risk of the German tax bureau reviewing the tax bill. Of course, the prerequisite is to do a good job in reporting: a closed loop must be formed in accounting reporting, and the values must correspond.
Established a subsidiary in Germany or the EU dedicated to imported goods
Subsidiaries import in their own name and resell to companies holding German tax numbers (B2B).
The problem with this solution is that there is a risk of tax fraud, and the tax bureau monitors it very strictly:
Tax deductions are long-lasting, and the tax office needs to review whether there is a possibility of tax fraud. Once the German or European Union subsidiary invoices incorrectly, VAT cannot be deducted, causing losses.
In practice, opening a company within the EU to do imports is often a legal matter instead of a tax, which becomes the biggest risk:
In the event of major quality problems or intellectual property disputes, the import company within the EU assumes all legal liabilities. When serious problems are encountered, the liability consequences are far greater than the other methods mentioned above. ——It is the way with the highest barriers to entry, but it has a lot of operating space and varied schemes.
Or set up a subsidiary in an EU country, and then the subsidiary will play the role of importer. In this case, it is still imported by various Chinese companies, but this European Union subsidiary acts as the person responsible for import, bears joint and several responsibilities, and becomes a true customs broker. The traditional customs brokers provide general customs clearance services and no longer bear joint and several responsibilities.