Whatnot - 2024 Tax guide - Germany

This guide has been prepared by an independent third-party law firm.  Every buyer’s and seller's situation is unique and so are their specific tax circumstances. The below stated information should not be considered as tax advice, but as a general overview of relevant tax rules. Whatnot does not provide tax advice for individual situations, and therefore we strongly recommend speaking with a professional tax advisor for tailored advice.

August 2024

GERMANY – TAX CONSIDERATIONS FOR GERMAN RESIDENT WHATNOT SELLERS

Hey there! If you’re a seller based in Germany and want to sell stuff through Whatnot, let’s talk taxes. 

Taxes can be tricky and therefore you should keep up to date with your tax obligations and remain tax compliant. The timely preparation, filing and payment of taxes are your responsibility per the Whatnot terms of Service.

As a German seller, make sure you are on top of the taxes that may apply to you, such as:

• Value added tax (VAT)
• Income taxes (Personal Income Tax and, if applicable, Trade Tax)

Just a heads-up: this guide covers Personal Income tax and VAT for German sellers. If you’re selling from outside Germany to German consumers, it’s a different story

The info in this guide isn’t all-inclusive and definitely not legal or tax advice. If you’re not sure on your local tax rules, it’s a good idea to double-check with your tax authorities or chat with a professional to get advice that is tailored to you. Whatnot cannot help you out with questions about this guide, it’s intended as a jumping off point.

Just so you know, we don’t refresh this info on the fly. Best to verify if there’s been any recent changes to the laws and procedures.

Under the EU’s DAC7 rules, Whatnot may need to report your income made through the platform to the Bundeszentralamt für Steuern (BZSt) which will then share this information with the tax office which is responsible for your income taxation (Wohnsitzfinanzamt). So, if there’s a difference between what Whatnot reports and what you report, the authorities may ask you questions about your income. More info on that here.

VALUE ADDED TAX

Value Added Tax (‘’VAT’’) can get tricky, so make sure you understand the rules as they relate to your specific situation.

When selling and shipping goods, the VAT rules vary depending on the destination:

• German buyers: German VAT rules will apply.
• EU buyers (outside of Germany): Generally, VAT rules in the buyer’s country apply if you sell for more than EUR 10,000 in other EU countries per year to consumers. If you sell goods across-borders to businesses, VAT exemptions on your supplies may apply.
• Non-EU buyers: For sales to consumers and businesses with exports out of the EU you can typically get VAT exemptions in Germany. In addition, VAT rules in the customer’s country may apply to you.

Below you’ll find more information on these categories.

SELLING TO GERMAN BUYERS

If you’re regularly providing goods or services in Germany (not just a one-time thing), you may need to register for and charge VAT to your buyers and pay this VAT to the German tax authorities.

Therefore, if you are selling items on the Whatnot platform, you may need to include German VAT in the item price and pay this VAT amount to the German tax authorities. You as the seller should figure out if you should charge German VAT on your sales.

Do I need to charge any VAT to German buyers if I am selling items on Whatnot?

If you regularly sell goods through Whatnot with the goal of making revenues, you’ll need to register for VAT and charge VAT to your buyers.

If you are a small business however you do not have to charge VAT. You are a small business if:

• Your sales did not exceed €22,000 in the previous year (including any sales made on other platforms or channels).
• You do not expect your sales to exceed €50,000 in the current year (including any sales on other platforms or channels).

Make sure to include sales made outside of the Whatnot platform as well when calculating these thresholds!

If you are a small business, you should not:

• charge VAT to your buyers
• issue VAT invoices to your buyers
• file monthly VAT returns (you do need to file an annual VAT return) and
• deduct any VAT charged to you.

There is a possible exception: As a small business you could decide to invoice and pay VAT like a normal business. This is voluntary. The advantage would be that you could get VAT from invoices issued to you refunded (as input VAT). For details please consult your tax adviser.

Should I account for VAT on the fees charged by Whatnot to me?

If you are registered for German VAT you should be sure to add your German VAT number to your Whatnot account via the flow described here. In such case, Whatnot will not charge VAT on the fees charged to you. Instead, you will have to account for VAT on these fees through the so called ‘’reverse charge’’ mechanism in your German VAT return.

This "reverse charge" effectively means that you have to report German VAT on Whatnot's fees charged to you in your German VAT return yourself in line 65 of your annual VAT filing return and line 29 of your preliminary - monthly or quarterly - VAT filing return (please double-check carefully regularly as this may change).

Do not worry, normally this does not result in any VAT payable by you because the VAT you add on your sales (output VAT) cancels out the VAT you pay on Whatnot's fees (input VAT) in the same return. This works as long as you're not selling stuff that's exempt from VAT (which you probably aren't). If you are selling certain exempt stuff, the VAT you report on Whatnot’s fees might not be fully recoverable. This is different if you qualify as a small business and do not charge VAT (see above), in this case you can also not deduct input VAT.

You should contact your local tax advisor to see whether you can fully deduct VAT under the reverse charge.

VAT applies to me. How do I calculate how much VAT I need to collect from German buyers?

VAT rates in Germany aren't set in stone, they can change sometimes. If you have to charge VAT to your buyers, it's a good idea to check with the BZSt every now and then to make sure you're charging the right amount.

In Germany, the standard VAT rate for selling products is currently 19%, but some things like for example most food items and most (comic)books and newspapers have a lower rate of 7%. Which rules and rate applies to a product really depends on what type of product it is.

There are also special schemes for people selling second-hand stuff and small businesses.  These deals can save you some cash on VAT.  On top of that, there are ways to make keeping track of VAT for your shop easier. See the Alternative Options below. You can also talk to your tax advisor about these special schemes if you think they might be a good fit for you.

If you supply goods free of charge to users on the Whatnot platform (for instance as a giveaway), you may need to report VAT in your VAT return on the price you paid for the purchase of that product.

VAT applies to me. How do I collect VAT from German buyers?

If you are registered for German VAT, you’ll need to collect the VAT from German buyers. Then, you have to report and pay that VAT to the government through your VAT return, usually every month. They might let you do it every quarter though, if you're not selling above a certain amount.

If you have to charge VAT, the price you show needs to include VAT already. Think of it like the final price with everything added in. Now, sometimes there's paperwork involved, like receipts or invoices with all the VAT details spelled out. You usually only need to issue a formal VAT invoice if a business is buying from you, not individuals. For individuals, the packing slip and receipt provided by Whatnot is usually fine.

If you do issue an invoice there are some specific things you have to include on an invoice by law. Like your and your customer's full info, VAT ID numbers, and the date. Also, don't forget to mention the VAT rates and amounts. If this sounds complicated, don't worry. Just ask a local expert to make sure you're on the right track.

In Germany, you have to file your VAT returns electronically. You'll do this monthly or quarterly, depending on your business, and then one summary for the whole year. And yes, you have to do it all online using the government's official forms.

Normally, you have until the 10^th of the next month to file your VAT return. So, your January return is due by February 10^th. If the due date falls on a Saturday, Sunday, or holiday, you get a grace period until the next business day. The VAT payment is due on the same day. It is possible to apply for an extension by one month for all VAT submissions (which would push the due date for the January VAT return to 10 March, for example).

The due date of the annual VAT return is 31 July of the following year. Sometimes you might be able to get a one-time extension, and sometimes the government might give everyone a few extra months in special cases, like after Covid. If you hire a professional tax advisor to do your annual VAT return, the deadline gets pushed way back by another 8 months. So, for 2024, a tax advisor wouldn't have to submit it until April 30^th, 2026.

For further guidance on filing returns, please see the German tax authorities' website.

Possibility to opt in to margin scheme

The margin scheme is a special way to pay VAT in Germany for resellers. You basically only pay VAT on the profit you make when you sell something, not the whole price. But there's a catch: you can only use this scheme if you're a reseller buying and selling certain used stuff, like from regular people or small businesses that don't charge VAT. Basically, you're buying stuff without VAT and then selling it with VAT added on your profit and not on the sales price. You pay VAT on the difference between what you bought the item for and what you sell it for.

Important note: This scheme doesn't work if you buy something with VAT already charged to you.

This scheme can also work for sales of artwork. However, with the margin scheme, you generally can't claim back any VAT you paid on stuff you bought (and neither can your customer). Not sure if it applies to you? Best to check with a local expert to see if the margin scheme makes sense for your business.

SELLING TO CUSTOMERS OUTSIDE OF GERMANY

Which VAT rules apply if I sell to customers in the European Union where my sales to these customers do not exceed EUR 10,000 on an annual basis?

If you're selling things to consumers in other EU countries (excluding Germany), and your total sales to them are under €10,000 per year (before VAT), then you can treat those sales the same way you treat sales to German customers.

For instance, if your total sales to all customers in the EU are as follows:

Sales to customers in the Netherlands: €3,000 per year;

Sales to customers in Belgium: €2,000 per year;

then you do not exceed the €10,000 threshold and the German VAT rules apply to your sales.

Important! This €10,000 limit counts all your sales across different platforms, like Whatnot and others.

For these sales under the limit, you have to charge German VAT and send that money to the German tax authorities with your regular VAT return.

Which VAT rules apply if I sell to customers in the European Union where my sales to these customers do exceed EUR 10,000 on an annual basis?

If you're selling more than €10,000 worth of stuff to consumers in other EU countries (excluding Germany) in total each year, things get a bit more complex for VAT. For these sales you have to charge VAT based on the VAT rules of the customer's country, not Germany's. So, the VAT rate might be different depending on where they live. This also means you're responsible for paying VAT in those other countries, even if you're a small business in Germany.

For instance, if your total sales to customers in the EU are as follows:

Sales to customers in the Netherlands: €8,000 per year;

Sales to customers in Belgium: €5,000 per year;

then you do exceed the €10,000 threshold and the VAT rules of your customer’s country apply to your sales.

For those sales over €10,000 to consumers in other EU countries, you don't report the VAT in your German return. Instead, there's this system called the One Stop Shop. It lets you report all that VAT in one big EU report, making things simpler. If you registered for the One Stop Shop, invoices are optional for you, but if you do send them, you have to make sure they follow the proper legal format.

For more information on the One Stop Shop VAT return, please click here.

The One Stop Shop is not mandatory. If you are not using it, you have to register for VAT in the EU countries where you are selling to though. In such case you also have to send VAT invoices to all your customers!

Sales to businesses from Germany to the EU are even easier to handle (both up to and above 10,000 EUR). You typically get VAT-exemptions in Germany, and the business buyers should self-report VAT in their own country. Do not forget to collect the formal evidence that you need for the VAT-exemptions in Germany (e.g. shipping documents and invoices).

Which VAT rules apply if I sell to customers outside the European Union?

Good news. When you sell things to people outside the EU, it's considered an export and you don't have to charge German VAT on it. Heads up, though: You still have to report this sale on your German VAT return, just to show it as an export. You also have to keep track of documents to demonstrate that your goods were exported from Germany.

PERSONAL INCOME TAX

If you made money selling things through Whatnot, you might owe personal income taxes on that income. This guide will give you the lowdown on what taxes might apply and how to pay them to the German tax folks.

Germany's tax year runs from 1 January to 31 December.

Which Income Taxes are there?

If you make money in Germany from selling items on a marketplace, you may be required to report these amounts and file a Personal Income Tax return and, maybe, a Trade Tax return.

This depends on whether your Whatnot sales are regular or just occasionally selling. Regular selling with the intent to make a profit is considered a business and gets taxed differently than one-off sales of your old stuff. Think of it like having a garage sale on a weekend vs. running a whole online store.

This is for those of you who are selling on Whatnot all the time, turning it into a regular thing. If that's you, the money you make might be considered business income, which means different tax rules.

Here's why:

• Running a regular shop on Whatnot, trying to make a profit, is like having your own mini-business.
• This is different from just selling off your old stuff here and there, which wouldn't count as a business.

So, what kind of taxes are we talking about?

• Income tax: you have to pay some of your earnings to the government.
• Trade tax: this might be an extra tax depending on your situation.

Not sure if your Whatnot hustle counts as a business? Best to check with a local expert to make sure you're on the right track with taxes.

If you're not running a full-blown online business (buying and reselling stuff regularly), you might still owe some taxes depending on what you sell:

• Sold something for a profit recently (within a year of buying it)? You might owe Income Tax on that profit.
• Getting rid of everyday things you use? Germany usually doesn't tax you on that. Think clothes, furniture, your old phone.
• Selling fancy stuff like art, antiques, or jewelry? Even if you wear them every day, they might get taxed differently because they can increase in value.

Note that, any gains from private sales are exempt from income tax if the total amount of the gains from private sales in a calendar year is less than EUR1,000.

If you don’t have a German certified tax advisor (Steuerberater) you have to use the "Elster" platform and software to file your income tax returns (https://www.elster.de/eportal/start). This is the official platform and it is free. You can, however, also use other software.

Sometimes you can file your tax return on paper to your local tax office. However, in certain cases you may have to submit your tax returns electronically.

By when do I have to file returns?

Normally, you have until 7 months after the year ends to file your income tax return in Germany. If you hire a special German tax professional called a "Steuerberater," the deadline gets pushed way back to February 28th of the year after next (or February 29th in a leap year).

By when do I have to make the payment?

You won't know exactly how much tax you owe in Germany until the tax office finishes looking at your return. They'll send you a bill (called a tax assessment notice) with the amount you owe. You usually have one month to pay the tax bill after you get it. Sometimes the tax office might ask you to pay tax upfront throughout the year. These are called prepayments, and they're usually due quarterly on the 10th of March, June, September, and December.

What are the contact details of the German Tax Authority?

The tax authority contact details usually depend on your location. See more on this here. For example, if you live in Munich, the Munich tax authority is responsible for your case and you would have to contact the office.

What are the German income tax rates?

German income tax is levied at rates rising on a sliding scale. The exact rate depends upon the amount of total taxable income you have; this rate is then applied to the entire "taxable income". For 2024, the income tax rates for single individuals are*:

• Income between €0 and €11,604 is covered by the basic allowance
• Income between €11,605 and €17,005 is taxable at 14% to ca. 24%
• Income between €17,006 and €66,760 is taxable at ca. 24% to 42%
• Income between €66,761 and €277,825 is taxable at 42%
• Income of €277,826 and over is taxable at 45%

*Please note that these amounts can change every year and you should keep an eye on this.

Germany has a tax called the "solidarity surcharge" that's an extra 5.5% on your income tax. There are some breaks for people with kids, and starting this year (2024), you only pay it if your income tax bill is over €18,130 for single people or €36,260 for married couples filing together.

Members of officially recognized churches pay church tax on top of their income tax. The rates are either 8% or 9%, depending on the federal state where you live, and apply on the income tax amount due.

The basic personal allowance is a "general allowance" of €11,604 (2024) built into the tax tables and taxed at a rate of zero. Even if you earn less than this amount, you might still need to file a tax return.

SOCIAL SECURITY CONTRIBUTIONS

If you're selling things online in Germany like a freelancer (not working for a company), you usually don't have to pay social security contributions. But there's a catch: Everyone living in Germany has to have health insurance, whether it's from the government or a private company. It's like a safety net in case you get sick or injured.