Case Study: Germany’s Umsatzsteuer for E-commerce

Germany has one of the strictest tax administrations in Europe. Many e-commerce sellers assume they always need to charge German VAT, but that is not always true.

The Law
According to Umsatzsteuergesetz (UStG) §3:

“The place of supply is where the transport begins.”

Meaning: if goods ship directly from China to Germany, the place of supply is not Germany, and the seller is not required to charge German VAT.

Example
A German Shopify seller importing fitness products from China initially charged 19% VAT on all sales. After restructuring, only import VAT applied, collected by DHL from the customer.

Legal Source:

• German Umsatzsteuergesetz – §3

Conclusion
Understanding national VAT laws in combination with EU law is key to avoiding unnecessary taxation.

Selling into Germany? Let us structure your business so you only pay what’s legally required — nothing more.