Show shipping costs correctly for tax purposes

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Those who order goods usually also pay for shipping

How to correctly report shipping costs for tax purposes

  • Definition: What are shipping costs?

    Shipping costs are incurred in connection with the shipment of a physical good. However, they are only one component of the so-called distribution costs that are incurred to deliver goods or merchandise to the recipient. In addition to shipping costs, there are also costs for packaging materials, customs duties and personnel costs, for example.

  • If costs for shipping are incurred, these are also always shown as a separate item on the invoice.

The ancillary service follows the main service for tax purposes

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Shipping costs – a practical example

Since packaging and shipping are an ancillary service and the items sold or even services are the main service of an invoice, the taxation or tax rate of the shipping costs must also be based on these main services.

Tax gobbledygook? Then here is a simple example of how shipping can be treated correctly for tax purposes:

You sell a book for 10,- Euro gross. You ship this book at 4,95 Euro gross. Books are subject to the reduced tax rate of 7% in Germany, therefore the shipping for this book must also be taxed at 7%.

If you sell a hiking backpack, on the other hand, you will be subject to 19% tax in Germany. If shipping charges are added to your backpack, they will also be taxed at 19% on the invoice.

You are an online merchant and charge shipping costs?

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Questions related to shipping costs

Companies, freelancers, self-employed, small business owners, startups – they all need to write invoices. Even for sales via online store you need to create invoices for your own accounting.

Your online store or the marketplace as a sales platform already takes a lot of work off your hands. But is the shopping cart always handled correctly for tax purposes? Which tax rate is your online store based on, for example, if you sell items with the reduced tax rate in combination with the non-reduced tax rate? Do you have to make a specific default for your tax rate of shipping costs? Or is this a default setting of your store?

Are shipping costs subject to VAT?

Basically, if the customer purchases goods that are subject to tax, shipping costs associated with this must also be shown with tax.

What happens to shipping costs in the case of a tax-free intra-Community delivery?

Provided that the recipient of the goods actually has a valid VAT identification number, the purchase of goods with shipping within the European Union would be tax-free. Accordingly, the taxation of shipping costs would also be omitted.

Should the shopping cart show the shipping costs as well?

For your customers alone, this would be an enormous advantage, so as not to catch anyone off guard here later due to unexpected costs. “Plus shipping costs” is shown by many providers, but the effort to find out the amount of these shipping costs then lies with the end customer.

My online store only supports a general tax rate for shipping. What should I do?

In this case, definitely contact the store system once. In the best case, your own online store should be oriented just as much towards the main service, i.e. the goods sold.

Are shipping costs and postage the same?

No, because postage refers only to the cost of the letter or parcel stamps. The shipping costs here include much more, such as postage, packaging, customs and personnel costs.


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