Dropshipping rules in Germany

Dropshipping in Germany is subject to a number of specific laws and regulations that every business must comply with to operate legally in the German market. This article provides a detailed overview of the legal framework, VAT requirements, consumer protection and other essential aspects you should know before starting a dropshipping business targeting the German market.

Definition and players

Dropshipping is a form of e-commerce ("Streckengeschäft") where the customer orders from an online store, which then forwards the order to a supplier (e.g. manufacturer or wholesaler). The supplier then ships the goods directly to the customer on behalf of the store. The German dropshipper (online merchant) is considered an "entrepreneur" under German VAT rules (§2 UStG) and must register a profession (Business).

The company has the same obligations as other German traders:

Profits and income tax
Possible Gewerbesteuer (business tax)
VAT registration (unless you qualify as a small business)
Declaring German VAT on invoices

Nationality is secondary; what matters is where the transaction is deemed to take place.

VAT and tax (Umsatzsteuer)

Basic VAT rules

In the initial situation, consider dropshipping transactions as chain transactions ("Reihengeschäfte") under German VAT law. Different rules apply depending on the location of the supplier and customer:

Domestic transactions: If both the place of dispatch and the recipient of the goods are in Germany, all links in the chain are German-taxed deliveries with 19% or 7% VAT.
EU suppliers: If the supplier is in another EU country, typically the import rule (as referred to in the EU distance selling package). Sales follow the destination principle and German VAT is applied if:
- Sales to Germany exceed €10,000 (one-time EU merger from 2021)
- Delivery formally begins in Germany
Imports from third countries: If the dropshipper imports goods from third countries (e.g. China), the German import rules apply:
- Since 30 June 2021, the previous €22 limit has been removed: All goods from third countries is now subject to import VAT
- Goods can be imported via IOSS (Import One-Stop-Shop) for items ≤ €150
- For goods > €150, the recipient (customer) must pay import VAT and possibly customs at the border

Kleinunternehmerregelung (small business scheme)

In Germany, before 2025, a startup could be exempt from VAT at < €22,000 annual turnover (2024). From 1 January 2025 the rules will change:

The limit is raised to €25,000 (based on previous year's turnover)
The VAT exemption can continue until total EU turnover reaches €100,000

New dropshipping businesses should therefore regularly check whether they fall under the small business rules or need to register for full VAT.

Customs and import liability

When importing from a third country (e.g. China), you must pay Import sales tax (EUSt) at the border. As mentioned, the limit is now €0 for the value of the item - all imports must be taxed.

Goods with a total value of up to €150 can be imported via IOSS, so VAT is paid in advance at the time of sale
Goods over €150 are subject to import VAT at customs
If the value of the goods exceeds the duty-free threshold (€150 for most goods), duty will also be added

The dropshipper (or customer) is financially responsible for EUSt and customs duties, unless the customer has to declare themselves.

Packaging requirements

After the German Packaging law anyone bringing packaged goods onto the German market must be registered with the national LUCID regulation:

According to the ZSVR (packaging register), the dropshipper is not considered a "Manufacturer" (as the item has never been owned by them)
The dropshipper does not need to register or pay licence fees for shipping packaging
However, the dropshipper has an obligation to check that the supplier (dropshipping sender) is registered and has a system licence for the recycling costs

Product safety and EU legislation (GPSR)

German dropshippers are considered distributors after The new EU General Product Safety Regulation (GPSR 2023/988)which will apply from 13 December 2024. This means:

Only safe consumer products can be sold (Art.5)
The supplier must ensure CE marking, user manuals and correct labelling
A retailer may not market a product if they know or should know it is unsafe or incorrectly labelled
Trading venues and fulfilment providers are now also covered by the rules
Marketplaces (like Amazon/eBay) must register with the EU Safety Gate system from 2024
Retailers must inform authorities and importers immediately if a product is found to be dangerous

GPSR expands the concept of 'manufacturer': a person who places products on the market under their own name or brand or significantly modifies a product is also considered a responsible manufacturer.

Dropshippers should ensure that the supplier's products are legal and that return/recall procedures can be handled, possibly with EU-based return address as suggested by consumer organisations.

Consumer protection and right of return (Widerrufsrecht)

In Germany (and the EU), private consumers with distance selling have a 14-day right of cancellation (right of cancellation):

Dropshipping stores must inform customers in writing about this right in a clear cancellation policy
The 14-day right generally applies to almost all physical goods (with some exceptions, such as personalised goods)
If the seller fails to provide correct information, the cancellation period can be significantly extended
The customer cannot be required to pay more in return postage than €40

German consumers also have a 2-year warranty under the German Sale of Goods Act (BGB) against defects for which the seller is liable.

The European Consumer Centre (ECC) in Germany points out that the returns process in particular often causes frustration with dropshipping: consumers have to send goods a long way back to the supplier abroad - which is why EVZ demands that providers in the EU market also provide a return location in the EU.

GDPR and data sharing

When the dropshipper processes customers' personal data (name, address, email, etc.), the following applies GDPR in full:

You must have a comprehensive privacy policy (Datenschutzerklärung)
According to GDPR §13, you must explicitly state in your policy that you share data with a dropshipping/fulfillment company
The legal ground for sharing data is usually Article 6(1)(b) (processing necessary for the performance of a contract)
Only send information that is strictly necessary (typically name and address, but email/phone may require separate consent)

Important: The purpose of the dropshipping suppliers (fulfilers) is not subordinate to the dropshipper's instructions in the GDPR sense, so a separate data processing agreement is not required.

Webshop requirements (imprint, terms and conditions, cancellation policy)

A webshop targeting German customers MUST have a correct Imprint (statutory publisher information):

The Impressum must contain the company name, address (registered office/head office), contact information, CVR number (Commercial Register number), etc.
This applies whether you sell via your own website or via platforms like Amazon/Ebay
Imprint should be accessible from all sides (often in the footer)

Furthermore, you must have:

A Data protection declaration (Privacy policy) in accordance with DSGVO
Cookie Consent tool if you use cookies/analytics
A Cancellation policy (cancellation guide) in German
General Terms and Conditions (AGB) are strongly recommended to prevent disputes

Conclusion

Dropshipping in Germany is subject to the same strict regulation as regular e-commerce, but with added complexity due to the supply chain. The key points to remember are:

Correct VAT registration and settlement depending on the supplier transaction
Compliance with German and EU product safety legislation
Clear communication about returns and complaints to consumers
Correct handling of customer data according to GDPR
Fulfilment of all formal requirements for German webshops

By following these rules, you can run a legal and successful dropshipping business in the German market.

Additional resources

For more information, visit the following official sources: