Trading in goods in Germany

Trading in goods in Germany

Question:
Hello!
Our company has decided to engage in online trading in Germany. We don't know which option is better for us:
1. The goods will be bought and sold in Germany
2. The goods will be sold on the principle of dropshipping, and at the end of the month we will receive a commission.
We are currently registered under Art. 97a paragraph 1. Should we register under another member in Bulgaria and respectively in Germany in order to be able to work? Do we need a German accountant? What documents do we need to present to our Bulgarian accountant? Is the profit tax paid here or in Germany?
Thanks in advance!

Answer:
Hello,
From a tax point of view, which option you choose has only a bearing on the VAT law.
In Option 1, upon reaching a sales turnover of EUR 10,000 to persons who are not registered for VAT, you will need to make an additional VAT registration (the so-called OSS regime) and start charging VAT on sales made to these persons. What is specific is that the VAT rate will depend on where these persons are located (assuming that they will be located in Germany, then the VAT rate will be 19%).
In Option 2, you actually perform a service (connecting the seller and the buyer) for which you receive a commission fee from the seller of the goods. If the seller is a person from the EU - registered for VAT or a company outside the EU, then the registration under Art. 97a is completely sufficient for you and you will not actually charge VAT on your sales. If the sellers are persons from the EU - not registered for VAT or natural persons outside the EU, then these sales will form a turnover for VAT registration in Bulgaria (the registration threshold for 2023 is BGN 100 thousand)
If you do not have any commercial establishments in Germany - a physical store, warehouse, office, showroom, etc., there will be no need for any registration there and accordingly you will not need a German accountant. All taxes will be charged and payable in Bulgaria.
The activity will be reported by providing all documents related to the company's commercial activity - purchase invoices, sales invoices, sales reports, bank statements, contracts.
We hope we have been helpful!
Greetings!