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Germany to reduce VAT from 19% to 16%: How to react if you are selling on Amazon?
As a reaction to the COVID crisis the German government has decided a stimulus package to help the economy. The main measures are to reduce VAT on products from 19% to 16% and 7% taxes down to 5% on staple food. This procedure will take place from the 1st of July until the end of the year 2020.
So the question is: what brands should do with these 3 extra % — use them as extra needed margin to cover costs, reduce prices to boost conversion, use the extra budget in advertising?
Does it apply to you?
For sellers which are using EFN (European Fulfilment Network) and have their products based not in Germany (for example in France, Spain or Italy) this will have no impact, as they will go on paying VAT in the country they are based (if they have below the local VAT threshold and not reporting VAT in Germany). In this case, your situation will be tough as you will have to compete with others which may reduce their prices.
It could be the right time for you to look into registering for VAT in Germany, and sending stock there. Amazon Germany is the biggest Amazon marketplace in Europe, and having a VAT number makes a lot of sense.
