October 29th, 2012 / Insight posted in

Exporter faces German VAT

BH writes: I make wooden toys for children, which I sell direct to the public. I have also had greatest success selling at toy fairs and have been thinking about going to fairs in Germany. I am registered for VAT in the UK but I am struggling to understand the position if I visit Germany to sell my toys. Do I need to charge VAT? If so, would it be UK or German VAT? Do I need to register for VAT in Germany or is there a limit below which I need not register? Only a small amount of my costs would be exposed to German VAT.

If you are selling goods while in Germany you will need to register for VAT in Germany and charge German VAT, which is usually referred to as Umsatzsteuer or USt, writes Adrian Houstoun, VAT partner at Kingston Smith LLP. 

The German VAT system is similar to that of Britain in most respects. However, like the UK, Germany has a number of variations from the general EU principles, so the rules may differ. It would therefore be sensible to appoint a German tax adviser to be certain that you are complying with German rules. 
Where you are selling to the German public, there is generally no threshold for VAT registration, so you will need to register. It is therefore likely that you will recover USt on most items that you purchase and need to charge USt on the sales of wooden toys at the prevailing rate, which is 19%.