For cross-border e-commerce, if you want to start an e-commerce business in Germany, you must know about value-added tax. However, the current German VAT has a limit on the number of customs clearances.
German VAT is what we often call value-added tax, the abbreviation of Value Added Tax in English, and it is also the post-sales value-added tax commonly used in the European Union. For cross-border goods, if you want to sell them in Germany, you need to pay import taxes when entering the German customs. If the goods are sold successfully, the VAT generated can be offset against the import taxes paid when entering the customs.
Using German VAT for customs clearance is also the German government’s way of regulating the behavior of cross-border e-commerce, so that the merchant can be found through the VAT number in case of any problems with the product. However, with the rapid development of cross-border e-commerce, the German government has also made regulations that the VAT registered by cross-border e-commerce can only be cleared eight times within a year. Once it exceeds eight times, VAT can no longer be deducted. This means that cross-border merchants need to pay twice when selling products, which increases the operating costs of merchants, reduces profits, and will also be under greater operating pressure in the future. If you want to use customs clearance again, you need a local German company with import and export rights to help with customs clearance as a guarantor.
For some novice sellers who are relatively small and have just started their e-commerce business, they have less business and can use their eight opportunities first. If they exceed the limit, it will be very convenient to use a local German agency to provide a guarantee to greatly reduce their pressure. However, if they are companies that have been in business for a long time, have strong strength and are more familiar with the German market, if they do not want to find a third-party guarantee company, they can completely set up their own company in Germany. In this way, they will not be limited to only eight customs clearance opportunities a year. They can guarantee themselves, not only can they clear customs an unlimited number of times, but they can also deduct the import tax of products. If there is an opportunity, they can even help other e-commerce companies in our country to guarantee and provide customs clearance times.