Etsy sellers: taxes and VAT in Germany

Do you sell on Etsy from Germany regularly? As a small business owner (Kleinunternehmer) you pay no VAT as long as your total turnover was no more than €25,000 in the previous year and is no more than €100,000 in the current year (§ 19 (1) UStG). Above that, standard taxation applies: 19 percent, 7 percent for certain goods.

Last updated: 27 October 2026

In short

Small shops count: Continuing activity for income makes you a business, profit motive or not (§ 2 (1) UStG).
EU customers: Over €10,000 of distance sales a year in total, destination-country VAT applies (§ 3c (4) UStG).
Platform report: Under 30 sales and €2,000 in consideration, you are exempt (§ 4 (5) no. 4 PStTG).

Do I have to pay taxes as an Etsy seller?

That depends on which tax you mean. The law names no minimum limit, neither for VAT nor for income tax, above which a shop is a business; it looks at characteristics. For VAT, every continuing activity to earn income is commercial or professional (§ 2 (1) UStG). A trade business (Gewerbebetrieb) within the meaning of the Income Tax Act requires more: an independent, continuing activity with the intention of making a profit that represents participation in general economic activity (§ 15 (2) EStG). Whether your shop meets both is in the end decided by the tax office; if in doubt, ask it or your tax adviser.

Tax	When it applies to you	Source
VAT	You are a business and not a small business owner.	§ 2, § 19 UStG
Income tax	Your profit from the trade business is part of your income. You file the return electronically.	§ 2 (1) no. 2, § 25 (4) EStG
Trade tax	You run a trade business. A tax-free allowance of €24,500 applies to individuals.	§ 2 (1), § 11 (1) GewStG

You can determine the profit as the surplus of business income over business expenses if you are not obliged to keep books and do not keep any (§ 4 (3) EStG). Under § 141 (1) AO, commercial businesses can become subject to bookkeeping if the tax office finds more than €800,000 total turnover in the calendar year or more than €80,000 profit in the business year. More on the EÜR: EÜR template: preparing and sending the income surplus statement in ELSTER. More on trade tax: Trade tax return in Germany, also for small businesses.

Anyone who opens a commercial business registers it with the competent authority (§ 14 (1) GewO) and notifies the municipality, which informs the tax office (§ 138 (1) AO). How to get your tax number is explained in Tax number in Germany: applying with the tax registration questionnaire online.

Am I a small business owner or taxed normally?

Small business owner: Your turnover is exempt if total turnover in the previous calendar year did not exceed €25,000 and does not exceed €100,000 in the current calendar year (§ 19 (1) UStG). According to the Finanzamt Hessen, the net sales received are what counts. In invoices you must not show VAT separately and you must refer to the exemption under § 19 (1) UStG; you have no input VAT deduction (Finanzamt Hessen). Limits, exceptions and the waiver trap are explained in VAT return for a small business in Germany: do I have to file?.

Standard taxation: The tax is 19 percent of the taxable amount; 7 percent applies to the goods listed in Annex 2 of the Act and other supplies named in the Act (§ 12 (1) and (2) UStG). You find out which rate fits your product from the Act or with the tax office. You submit an advance return by the tenth day after the end of the return period (§ 18 (1) UStG). The return period is the calendar quarter; if the previous year's tax was more than €9,000 it is the calendar month (§ 18 (2) UStG). On top comes a tax return for the calendar year (§ 18 (3) UStG). The ELSTER steps are in German advance VAT return (UStVA): filing online, deadlines and permanent extension.

Invoices: § 14 (2) UStG sets a duty to issue an invoice for supplies to other businesses, to legal entities that are not businesses, and for certain supplies connected with land. For sales to private individuals there is, as a rule, no duty to invoice under that provision; you may still issue one. You keep vouchers for eight years (§ 147 (3) AO); how you may scan them is explained in Scan receipts and read invoices with AI: what applies in Germany?.

Etsy sales to other EU countries: when does VAT apply there?

If you ship goods to private customers in another EU country, this is an intra-Community distance sale. The place of supply is then where the goods are when the transport or dispatch ends – in the buyer's country (§ 3c (1) UStG). The law does however know a de minimis limit: if your seat, management or establishment is in only one member state, this rule does not apply as long as the total of your distance sales and certain services to private customers in other member states did not exceed €10,000 in the previous calendar year and does not exceed it in the current calendar year (§ 3c (4) UStG). You can declare to the tax office that you waive this limit; the declaration binds you for at least two calendar years.

Above it you pay the VAT of the destination country. Instead of registering in each country, you can take part in the special scheme (One-Stop-Shop, OSS); you notify your participation (§ 18j UStG). Details: EU OSS threshold of €10,000: examples and calculation, Distance sales in Germany under § 3c UStG and OSS return for online sellers: step by step. Special rules apply to small business owners; OSS for small businesses explains them.

Three cases work differently:

Margin scheme: The distance-sales rules do not apply to goods to which you apply the margin scheme under § 25a UStG (§ 3c (5) no. 3 UStG).
Digital products: For services supplied by electronic means to private customers, the customer's place applies; the €10,000 limit counts together with the distance sales (§ 3a (5) UStG). If in doubt, clarify with the tax office whether your download is such a service.
Customers outside the EU: If you transport or ship the goods to the third country, the supply is an export supply and tax-exempt (§ 4 no. 1 lit. a, § 6 (1) UStG). You must prove the conditions (§ 6 (4) UStG). This article does not cover the rules of the destination country, for example for imports.

What does the platform report to the BZSt (DAC7)?

Since 1 January 2024, operators of digital platforms have to transmit data on their sellers to the BZSt if the platform falls under the Platform Tax Transparency Act (PStTG). Relevant activities include the sale of goods (§ 5 (1) PStTG). A seller is exempt if, in a reporting period, they sold goods through the same platform in fewer than 30 cases and received less than €2,000 in total consideration for it (§ 4 (5) no. 4 PStTG). In January the platform operator provides you with an overview of the reported data; you check it and can compare it with your own records (BZSt). Details and deadlines: VAT for eBay sellers in Germany.

Which mistakes happen often?

Dismissing the shop as a hobby although it brings in income continuously. For VAT a continuing activity to earn income is enough; the intention to make a profit is not required (§ 2 (1) UStG).
Calculating the small business limit wrongly. What counts is net sales received, with €25,000 in the previous year and €100,000 in the current year.
Showing VAT in the invoice as a small business owner. This is not allowed; the reference to § 19 (1) UStG applies (Finanzamt Hessen).
Overlooking the €10,000 limit for EU sales. It applies to the total of all distance sales and certain services to other EU countries, not per country.
Ignoring the platform overview. The BZSt material is a comparison for your own records; you report differences to the platform operator.
Not keeping vouchers. Accounting vouchers must be kept for eight years (§ 147 (3) AO).

How VAT GPT helps

On Etsy you work in VAT GPT with your invoices and receipts:

Upload: You upload invoices and receipts as a photo or PDF into the Germany or OSS field. The AI reads amounts, countries and tax rates; if the recognised tax type does not match the field, VAT GPT warns you.
Check: Your data becomes the advance VAT return (monthly or quarterly), the annual VAT return, the OSS return, EÜR, trade tax and income tax returns. You check and confirm.
Send: With VAT GPT Pro you send the returns via ELSTER straight to the tax office, and the OSS return to the BZSt.

You create your own invoices in VAT GPT as ZUGFeRD or XRechnung. To get started, VAT GPT asks you in the tax registration questionnaire for sole proprietorships whether you apply the small business scheme. There is Free (basic features, free of charge), Go (30 days free with all Pro features) and Pro (€49 per month or €444 per year, each including VAT). Sending to ELSTER is part of Pro. Try for Free Now

Frequently asked questions

Do I have to register a business as an Etsy seller? Anyone who starts a commercial business must notify it (§ 14 (1) GewO). Whether your shop is a trade business depends on the characteristics in § 15 (2) EStG.

From what turnover do I pay VAT? A small business owner is exempt up to €25,000 in the previous year and €100,000 in the current year (§ 19 (1) UStG). Above that, standard taxation applies.

What is the €10,000 threshold? It concerns sales to private customers in other EU countries: up to €10,000 a year in total, the place stays in Germany (§ 3c (4) UStG).

Do I have to pay VAT if I only sell to customers outside the EU? If you transport or ship the goods to the third country, the supply is tax-exempt as an export supply, provided you prove the conditions (§ 6 UStG).

Does the tax office see my Etsy sales? If the platform falls under the PStTG, the operator reports your data to the BZSt unless you are exempt (BZSt; § 4 (5) PStTG).

How long must I keep vouchers? Accounting vouchers eight years (§ 147 (3) AO).

Can I be a small business owner and an EU seller at the same time? Special rules apply; they are explained in OSS for small businesses.