Software Sales Tax in Germany 🌶🌶 🇩🇪

If your business has a physical presence in Germany, you only need to register for sales tax if your sales exceed €17,500 a year. If you sell software to customers in Germany but your business is based elsewhere, you’ll need to register for VAT right away. 

If you sell into more countries across the EU, and your sales exceed €10,000 a year, you can register for the VAT MOSS system, which allows you to then file and remit your sales taxes for multiple EU member states in one transaction.

Filing frequency: Quarterly

Like filings for other countries in the EU, the process in Germany is pretty straightforward.

However, if you serve business customers in Germany and other EU member states under the VAT MOSS system, it does come with quite a bit of admin. 

In this instance, you’ll need to complete a separate filing called the EC Sales List. This is so you can document and report all of your sales to VAT-registered customers in one go.

Tax penalties in Germany are on the high side, both for mistakes made in error and for those found to be deliberately avoiding tax responsibilities.  

The higher your sales in Germany, the greater the fines. For example, the cap on the fine increases for those with sales exceeding €100,000, and then again for those above €1m. Germany also places heavy responsibility on individuals to declare any sales tax issues to the authorities up to ten years after the event. 

If you sell to additional countries in the EU, under the VAT MOSS system, you can be excluded if you’re late with or fail to submit your returns for three consecutive quarters. This would mean you then have to register, file and remit your sales taxes in each individual member state.