Dropshipping and VAT: what applies in Germany

In dropshipping to customers in Germany, you as the seller owe the VAT on your sale, unless you are a small business owner (§ 19 (1) UStG). If your supplier is based in Germany, the supplier owes it on its supply to you, and you deduct it as input tax if you are under the regular scheme and hold a proper invoice. That is because for VAT you remain your customer's supplier, even if the supplier ships directly (§ 3 (1) UStG). If the goods come from a third country, import VAT comes on top; consignments up to €150 have a procedure of their own (§ 18k UStG).

Last updated: 29 October 2026

In short

Chain transaction: Transport is attributed to only one delivery in the chain (§ 3 (6a) UStG).
Input VAT: Deduct the VAT from your supplier's proper invoice (§ 15 (1) no. 1 UStG).
Small businesses: Exempt up to €25,000 (previous year) and €100,000 (current year), without input VAT deduction.

Who owes the VAT in dropshipping?

Supplier is based in	Who owes what
Germany	Your supplier owes the tax on its supply to you, you owe it on your supply to the customer unless you are a small business owner (§ 13a (1) no. 1 UStG). You deduct input tax from the supplier's invoice.
another EU country	An intra-Community acquisition may arise for you; then the acquirer is the tax debtor (§ 13a (1) no. 2 UStG). Whether it fits is a question of the individual case.
a third country	The import is subject to import VAT (§ 1 (1) no. 4 UStG). Who owes it depends on the case. Whether your own supply counts as made in Germany depends on who owes the import VAT (section 3 (8) UStG).

The sections below explain the three cases in turn.

What this means for you: find your supplier's country first, because it decides who owes which VAT in your chain.

Who is the supplier in dropshipping?

The law defines a delivery as a service by which the business, or a third party on its order, enables the recipient to dispose of a good in its own name (§ 3 (1) UStG). In dropshipping your customer is the recipient and your supplier the third party acting on your order. If several businesses conclude supply contracts on the same good and it passes directly from the first business to the last customer, it is a chain transaction: transport is attributed to only one of the deliveries (§ 3 (6a) sentence 1 UStG). If the first business in the chain transports or ships the goods, it is attributed to its delivery (sentence 2). Your supplier then delivers to you with transport; your delivery to the customer follows it. Deliveries that follow the transport delivery are treated as made where the transport ends (§ 3 (7) sentence 2 no. 2 UStG); deliveries before it where it begins (no. 1).

For customers in Germany, your delivery is therefore made in Germany (§ 3 (7) UStG).

What this means for you: towards your customer in Germany you are the supplier, so your sale takes place in Germany.

What applies with a supplier in Germany?

If your supplier is in Germany and the goods go to a customer in Germany, transport begins and ends domestically. Both deliveries are then domestic sales. VAT applies to deliveries that a business makes within Germany for consideration (§ 1 (1) no. 1 UStG). The rate is 19 percent, for certain goods 7 percent (§ 12 UStG).

Example under standard taxation at 19 percent: your customer pays €119.00 (€100.00 net plus €19.00 VAT). Your supplier charges you €59.50 (€50.00 net plus €9.50 VAT). You account for €19.00 output VAT and deduct €9.50 input VAT; you pay €9.50 to the tax office. You deduct input VAT only if you hold an invoice issued under §§ 14, 14a UStG (§ 15 (1) no. 1 UStG).

What this means for you: charge VAT on your sale and deduct the VAT from your supplier's proper invoice, unless you are a small business owner.

What applies with a supplier in another EU country?

If your supplier ships from one member state to consumers in another member state, an intra-Community distance sale may exist: the delivery of a good that is transported by the supplier or on its behalf to another member state. The place is then where the goods are when the transport ends (§ 3c (1) UStG). A de minimis threshold of €10,000 applies only to businesses with a seat or establishment in only one member state (§ 3c (4) UStG). If your supplier ships the goods, § 3 (6a) sentence 2 UStG attributes the transport to its delivery to you. If the transport ends in Germany, an intra-Community acquisition by you may arise (§ 1 (1) no. 5, § 1a (1) UStG), whose tax you can deduct as input VAT (§ 15 (1) no. 3 UStG). Whether your delivery to the customer is also an intra-Community distance sale, to which the €10,000 threshold and the OSS apply, or a delivery treated as made where the transport ends (§ 3 (7) sentence 2 no. 2 UStG), is a question of the individual case which this article does not answer for you. For sales to other EU countries: the EU OSS threshold of 10,000 euros and distance sales under § 3c UStG.

What this means for you: check in each case whether an intra-Community distance sale or acquisition arises before you sell.

What applies with a supplier in a third country, for example China?

Imports of goods into Germany are subject to import VAT (§ 1 (1) no. 4 UStG). If goods come from a third country into Germany, the place of your delivery is treated as being in Germany where the supplier or its agent owes the import VAT (§ 3 (8) UStG). As a business you can deduct the import VAT that arose on goods imported for your business as input VAT (§ 15 (1) no. 2 UStG).

For consignments with an intrinsic value of up to €150 there is the special procedure under § 18k UStG (in practice called IOSS): the place of a distance sale from a third country is in the destination country if the tax is declared in that procedure (§ 3c (3) UStG). The import is then VAT-exempt if the supplier's individual identification number is given in the customs declaration (§ 5 (1) no. 7 UStG). You notify participation (§ 18k (1) UStG). Customs, customs value and other import charges are not covered by this article.

What this means for you: expect import VAT on goods from a third country; who owes it decides where your delivery counts as made, and consignments up to €150 have their own procedure.

How does dropshipping through a marketplace work?

If you sell through a marketplace, the operator is liable under conditions for unpaid tax from your delivery (§ 25e UStG). In special cases it is itself treated as the supplier, namely for deliveries by sellers established outside the EU to consumers and for distance sales from a third country of up to €150 (§ 3 (3a) UStG). Details: Kaufland marketplace: VAT for sellers.

What this means for you: the marketplace can be liable for your unpaid tax, so keep your VAT details valid.

What applies to small business owners in dropshipping?

If you are a small business owner (total turnover of no more than €25,000 in the previous year and no more than €100,000 in the current year, § 19 (1) UStG), you do not show VAT and have no input VAT deduction (Finanzamt Hessen). The VAT on your supplier's invoices is then a cost for you. More: VAT return for small businesses in Germany.

What this means for you: as a small business owner you show no VAT and deduct no input VAT, so the VAT on supplier invoices is a cost.

Which mistakes happen often?

Treating your supplier as the seller to your customer. Towards your customer you are the supplier if your supplier delivers on your order.
Deducting input VAT without a proper invoice. The deduction requires an invoice issued under §§ 14, 14a UStG.
Forgetting the import. Goods from a third country are subject to import VAT; who owes it depends on the individual case.
Applying the €150 limit to the whole order. What counts is the intrinsic value per consignment (§ 18k (1) UStG).
Showing VAT as a small business owner. That is not permitted (Finanzamt Hessen).

What this means for you: you are the supplier to your customer, so get proper invoices, plan for import VAT and count the €150 per consignment.

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Frequently asked questions

Do I pay VAT in dropshipping? Yes, unless you are a small business owner: you owe the tax on your sales and deduct the VAT on your supplier's invoices as input VAT (§ 15 (1) no. 1 UStG).

Where does my delivery take place? If your supplier delivers to a customer in Germany, your delivery after the transport delivery is treated as made where the transport ends (§ 3 (7) sentence 2 no. 2 UStG).

What changes with goods from China? Imports are subject to import VAT (§ 1 (1) no. 4 UStG); if the supplier or its agent owes it, the place of delivery is treated as being in Germany (§ 3 (8) UStG). Up to €150 per consignment there is the procedure under § 18k UStG.

Can I run dropshipping as a small business owner? The law ties the exemption in § 19 UStG to the turnover limits, not to the type of business. Note that you have no input VAT deduction (Finanzamt Hessen).

Do I need a VAT ID? For a marketplace operator's freedom from liability a valid VAT ID matters (§ 25e (2) UStG). How to store it: eBay VAT ID in Germany.

Do I have to pay VAT if my supplier has already charged it? Yes, unless you are a small business owner. The tax on the supplier's invoice is the supplier's tax on the supply to you. You owe yours separately on your sale and deduct the supplier's as input tax. You pay the difference to the tax office, €9.50 in the example above.

Who owes the VAT in dropshipping, me or the supplier? If your supplier is in Germany, each owes the tax on their own supply (§ 13a (1) no. 1 UStG); as a small business owner your sale is exempt (§ 19 (1) UStG). If the supplier is in another EU country or a third country, see the table above.