Foreign companies that store goods in Germany or supply German private customers are frequently liable to German VAT without having an establishment here. The rules have changed several times in recent years, and the next change is due at the turn of the year 2026/2027. This article sets out what applies and what to expect from 2027.
When registration becomes mandatory
A VAT registration in Germany is not triggered by turnover but by an event. The two cases that matter most in practice:
Stock held in Germany. As soon as a company holds goods in a German warehouse and sells from there, an obligation to register arises — regardless of turnover and regardless of whether the warehouse is operated by the company itself or provided by a service provider. A marketplace operator’s fulfilment centre counts just as much as your own.
Distance sales to German private customers. Where a company supplies private individuals in Germany from another EU state, the place of supply shifts to Germany once the EU-wide distance selling threshold of EUR 10,000 is exceeded. A German registration or participation in the One Stop Shop is then required.
The most common misconception: the EUR 10,000 threshold does not apply to everyone
In practice the distance selling threshold is regularly applied to companies it does not cover at all.
§ 3c Abs. 4 UStG requires the supplier to have its seat, its management or a permanent establishment in only one member state. A company established in a third country has none of these in any member state and therefore does not meet that condition.
The consequence: for a company from the United Kingdom, Switzerland, the United States or China there is no de minimis threshold. The turnover is taxable in the country of destination from the first euro. A third-country business relying on the EUR 10,000 registers too late.
How often returns are due: the thresholds since 2025
How often an advance VAT return has to be filed depends on the previous year’s tax. Those thresholds were raised on 1 January 2025.
| Previous year’s tax | Advance return |
|---|---|
| more than EUR 9,000 | monthly |
| EUR 2,000 to 9,000 | quarterly |
| not more than EUR 2,000 | exemption possible — the decision is at the tax office’s discretion |
The earlier figures of EUR 7,500 and EUR 1,000 still appear in numerous publications online. They have been out of date since the beginning of 2025.
What changes on 1 January 2027
Here lies the real news for companies planning a registration.
Under § 18 Abs. 2 Satz 4 UStG a company starting a new activity has to file monthly in the current and the following calendar year. That rule is suspended by § 18 Abs. 2 Satz 6 UStG for the assessment periods from 2021 to 2026.
During the suspension, the filing frequency for a new company follows the expected tax for the current year, that is the figure given in the tax registration questionnaire. A company expecting low turnover can therefore file quarterly from the outset.
As things stand the suspension ends with the close of 2026. Unless the legislator extends it, the basic rule applies again from 2027: two years of monthly returns for every new registration, whatever the level of turnover.
The difference between four and twelve returns a year is considerable over two years — in effort and in the scope for error. Anyone planning a registration in any event should check the state of the legislation again in the autumn of 2026; an extension of the suspension is possible.
Late filing penalty: the 10 per cent cap no longer exists
Another point where out-of-date information persists. Numerous sources refer to a cap on the late filing penalty of 10 per cent of the tax assessed. That wording comes from § 152 AO as it stood before the 2019 reform and is no longer the law.
For the advance VAT return the position today is:
- § 152 Abs. 1 AO: for a tax return of the self-assessment type — and an advance return is one — imposing the penalty is at the tax office’s discretion. The mandatory imposition under paragraph 2 concerns only returns relating to a calendar year or to a date laid down by law.
- § 152 Abs. 5 Satz 1 AO: 0.25 per cent of the tax assessed for each month begun, but at least EUR 10 for each month begun.
- § 152 Abs. 10 AO: the penalty may not exceed EUR 25,000.
The monthly minimum is the point that surprises in practice: where the tax due is small, it is not the percentage that governs but the number of months begun.
For the annual VAT return the minimum is higher — § 152 Abs. 5 Satz 2 AO sets EUR 25 for each month begun. The two amounts are frequently confused.
What comes with it in practice
Registration is only the beginning. What follows is the ongoing obligation: advance returns at the frequency set, the annual return, where applicable the EC Sales List, and all the correspondence with the competent tax office. For foreign companies the obstacle is rarely the tax itself but the language and the procedure: communication with the tax office is in German and, in large part, still by post.
That is exactly where our tax work for foreign companies comes in — registration, advance returns, deadlines and the correspondence with the authorities, conducted in German and reported in French or English.
For companies that need German VAT alone and want the handling in English, we run a separate offering with Vaytax — with the tax expertise in house. A detailed account of the registration procedure, including the documents required depending on the country of establishment, can be found under VAT registration for foreign companies (in German).
Three points to take away
- The obligation to register arises from the warehouse or the distance sale, not from a turnover limit.
- The EUR 10,000 distance selling threshold is not open to third-country businesses. For them, taxation in the country of destination applies from the first supply.
- The suspension of the two-year monthly filing rule for new registrations expires at the end of 2026 as things stand. Anyone registering in 2027 should plan for monthly returns.
Law as at August 2026.