European Union VAT on E-Commerce Transactions in Germany

How Value added tax (VAT) is charged depends on the rates of the seller's country as well as whether the transaction is a B2B or B2C transaction. The European Union (EU) believes that e-commerce would be more effective if VAT were charged at the rate of the buyer's country. Many e-commerce firms shop around for the lowest VAT rate nations and establish their businesses there. Germany does not want to change the VAT regime ahead of a planned rise from 16% to 19% in its own VAT rates.

The following questions have been addressed in this article:

What rules apply to indirect e-commerce transactions?
What rules apply to direct e-commerce transactions?

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