Germany: Selling

Customs Procedures

Import Procedures

Import procedures are subject to a declaration on-line or on paper. You will find further information on the German Customs Authority website.

The official model for written declarations to customs is the Single Administrative Document (SAD). The SAD serves as the EU importer's declaration.  It encompasses both customs duties and VAT and is valid in all EU Member States.

As part of the "SAFE" standards advocated by the World Customs Organisation (WCO), the European Union has set up a new system of import controls- the "Import Control System" (ICS)- which aim to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Programme eCustoms, has been in effect since 1 January 2011. Since then, operators are required to fill out an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union. The EU recently introduced a new import control system called ICS2 to implement the EU customs pre-arrival security and safety programme.

Non-agricultural goods entering EU territory must adhere to customs formalities (ENS). This declaration must be carried out by the person bringing the goods to the territory. The Summary Declaration can be made electronically or on a form provided by the customs authorities. The deadline for lodging the ENS depends on the mode of transport carrying the goods.

Since July 1, 2009, all companies established outside of the EU are required to have an EORI number if they wish to lodge a customs declaration or an Entry/Exit Summary declaration. Once a company has received an EORI number, it can use it for exports to any of the 27 EU Member States.

Goods in transit only need a single EU transit document.

Inward processing is free of customs treatment. This procedure allows raw material (non-Union good) to enter temporarily without customs fees if it will be processed (or repaired) and re-export the finished products out of the EU territory. In this case, the importer gives a guarantee (from an insurance company or bank) equal to the amount of customs duties that would have been due on the imported raw material. This guarantee will be reimbursed when the final product is exported. This process also applies to goods planned to be re-exported. Only goods sold in the EU market are eligible to import duty and taxes.

For outward processing, duties and taxes apply only to the value added during the process. Only firms located in Germany or in the EU may take advantage of this measure.


Check the website of the EU Customs Union periodically for updates.

Specific Import Procedures

The Union Custom Code - adopted on 9 October 2013 as Regulation (EU) No 952/2013 - Title V provides for the following customs simplifications:

• Simplified declaration (Article 166 UCC)
• Centralised clearance (Article 179 UCC)
• Entry in the declarant's records (Article 182 UCC). This type of customs declaration is not allowed for all customs procedures (e.g. exclusion of transit).
• Drawing-up of customs declarations for goods falling under different tariff subheadings ( Article 177 UCC)
• Self-assessment (Article 185 UCC)

Importing Samples

For the import, export and re-export of commercial samples the ATA (Temporary Admission) carnet can be used. It must be written on the product that it is a free sample and that it may not be sold.

Customs Duties and Taxes on Imports

Customs threshold (from which tariffs are required)

EUR 150

Average Customs Duty (Excluding Agricultural Products)

Import duty and taxes are due for goods imported to Germany from outside of the European Union- whether by a private individual or a corporate entity. Germany is party to the European Union’s Common Customs Tariff, therefore preferential rates apply to imports from countries which the EU has signed agreements with. Duties range from 0-17%, with the general tariff averaging 4.2%. However, foodstuffs, textiles and clothing still experience some protection measures (quotas, higher tariffs, etc.). Some imports are subject to anti-dumping duties.

Products Having a Higher Customs Tariff

The sectors of fabrics and items of clothing (high duties and quotas) and foodstuffs (preferential treatment and many tariff quotas, CAP) still experience protection measures. According to the recently published 2019 EU Trade Policy Review (WTO), the sector with the highest average tariffs is the dairy sector (32.3%), followed by sugar and confectionery (27.0%), meat (19.0%), cereals and preparations (17.2%) and fruit and vegetables (13.0%). Concerning non-agricultural products, fish and fishery products (11.8% on simple average) and clothing (11.6%) are the sectors with the highest tariff protection.

More information can be found in the WTO Tariff profile of the EU.

Preferential Rates

For countries with whom a bilateral or a multilateral agreement have been signed by the European Union.

To get further information consult the website of the European Union.

To get further information on customs policies in the European Union, please check the exhaustive report by the European Commission.

Customs Classification

Germany uses the harmonised system.

Method of Calculation of Duties

Customs duty is calculated Ad Valorem on the CIF value of the goods, in accordance with the Common Customs Tariff (CCT) for all the countries of the Union. TARIC, the integrated Tariff of the European Union, is a multilingual database integrating all measures relating to EU customs tariff, commercial and agricultural legislation.

Method of Payment of Customs Duties

Duty is payable in cash (in Euros, by cheque, by cash money order, by bank transfer); an extension of the time limit for payment may be granted through systems of collection credit or duty credit.

Import Taxes (Excluding Consumer Taxes)

None.

Labeling and Packaging Rules

Packaging

Packaging must conform to the European legislation on the prevention of health risks to consumers and the protection of the environment, especially with regards to waste treatment. Packaging in wood or vegetable matter may be subject to a phytosanitary inspection.
The CE mark is mandatory in the EU countries for any electrical apparatus. Council Directive 2007/45/EC harmonizes packaging of wine and spirits throughout the EU.
For further information, consult the summary of the European legislation concerning product labelling and packaging.
On 1st January 2019, the new legislation on packaging entered into force : German Packaging Act 2019 (VerpackG), replacing the Packaging Ordinance. All actors, including online retailers, who bring packaged products (including padding material) onto the German market and which end up as waste with the consumers, are subject to the VerpackG. This German Recycling law covers distributors who put packaging into commercial circulation on the German market for the first time and applies both to national producers and for importers, online dealers, etc. It is not aimed at raising import taxes however and would not impact the total landed costs calculations as such. For more detailed information on the new Packaging Law (VerpackG), you may wish to consult:
Packaging Law Overview - VERPACKG
German Packaging Act - DerGrünePunkt
Packaging Europe.

Languages Permitted on Packaging and Labeling

German. However, English is used to give an international image to a brand. Be careful of confusion! Several studies have shown the difficulties German consumers have in correctly understanding a slogan in English.

Unit of Measurement

Metric system.

Mark of Origin "Made In"

No obligation except for foodstuffs and alcoholic beverages. In practice, the "made in" is a commercial argument and it is present on most products. The Madrid agreement provides for penalties if the information on the country of origin is false.

Labeling Requirements

For more information on Labelling, Packaging and Marking Requirements, please refer to the Hong Kong export promotion's Guide to doing business with the EU.
Although non-mandatory, the 'Green Dot' recycling symbol is found on all products sold in Germany.

Specific Regulations

European legislation provides for specific labeling rules for certain products such as foodstuffs, household equipment, sportswear, textiles, medicines, chemicals, etc.

Distribution Network

E-commerce

Internet access

With a population of 82 million, Germany is the largest country in Europe and benefits from a strong and stable economic environment. In 2017, revenues in B2C ecommerce recorded a 39% growth in Germany. Internet access is widespread in the country with 89% of the population using the internet (World Bank, 2016). The number of smartphone users in Germany was about 55 million in 2017. Google is the leading search engine in Germany, both on mobile and desktop devices, with Bing and Yahoo the other key players.

E-commerce market

E-commerce is developing at a steady pace in Germany. According to German e-commerce association Bevh, the market’s total revenue in 2017 reached US$ 63.5 billion and is expected to be US$ 69.7 billion in 2018. The two biggest online stores in Germany are American giant Amazon and German founded Otto. Berlin based online clothing store Zalando comes in third place. These three actors dominate the e-commerce market in Germany. A few other stores are smaller: Notebooksbilliger, Cyberport, Bonprix, among others. In 2017, consumers bought more frequently and spent more on average than the previous year. 79% of internet users in Germany are considered online shoppers, which is a higher share than ever before. In Germany, 10% of online sales are made with smartphones. The country is the third most active market worldwide in terms of import and export e-commerce, behind the USA and the UK. In Europe, Germany ranks third for B2C online turnover, after the United Kingdom and France. Cross-borders online sales made by Germans come mainly from the USA, the UK and China, and lower prices are among the main reasons to shop from foreign websites. Moreover, Estonia benefits from a privileged relation with Germany as private distributors from both countries have developed business agreements in order to facilitate e-commerce between the two markets. 

E-commerce sales and customers

Trust and security are crucial values in Germany. Traditionally, at least for durable goods, Germans will prioritise quality, trust and comfort over price. Thus, a German buyer will preferably visit a store where they can touch and try the product instead of a website. For everyday goods, Germans tend to be very concerned with price and will often seek discounts. For this type of goods, e-commerce represents an opportunity in Germany. Out of the 72 million persons using internet in Germany, more than 70% make purchases online. The profile of the average buyer is a person between 30 and 40 years old living in an urban area. In 2017, the average revenue per user was US$ 1,251. Even if there are still differences in consumption habits between the western and eastern parts of Germany, e-commerce tends to overpass them. Online purchases in Germany are mostly made in clothing and footwear, books, DVDs and CDs, home electronics and cosmetics. Books are most commonly purchased via mobile devices. Even though computers are the most popular device when it comes to shopping online, mobile commerce is growing steadily in Germany. Smartphones are increasingly popular, with the mobile share of retail e-commerce sales amounting to 38%, making Germany one of the m-commerce leaders in Europe. Most of online purchases are made by credit card or online payment services such as Paypal and e-wallets. However, as mentioned above, trust being very important in Germany, some buyers might be reluctant to use this method of payment and will then prefer paying after the purchase through invoice.

Social media

At least 75% of internet users in Germany have an account on a social media platform and use it frequently. Facebook is by far the most popular social media in Germany, with about 32 million users (38% of the population). Instagram accounts for 9 million active users, according to the company, and is popular with people aged bewtween 14 and 29, but isn’t used much by older demographics. So far, Twitter’s use has been limited in Germany, with 5.7 million people using it in the country. The German language is made of long words and is very descriptive while Twitter only offers a limited number of characters to communicate. Google+, Linkedin and Youtube are present in the country as well but there are also homegrown social media platforms, like Xing (the German version of LinkedIn) and StudyVZ (a students’ network). It is also important to note that almost 80% of Germans say they use WhatsApp for daily communication.

Direct Selling

Evolution of the Sector

The European Direct Selling Association (SELDIA) shows Germany's direct selling market grew 3.7% in 2017, reaching EUR 14.82 billion and involving 884,932 independent representatives. More than 80% of German enterprises use direct marketing. The most frequently used formats are email and Internet marketing, telephone marketing (31%), direct mail (24%) and catalog sales. In addition, Germans particularly enjoy 'sales parties' at home as a mean to socialize. Companies using direct marketing must follow stringent data protection, consumer protection and advertising laws.

According to Euromonitor International, direct selling is expected to grow despite increased pressure from internet retailing given Germans' appreciation for direct selling consultants. Main products sold directly include housewares, home furnishing, and consumer appliances. Vorwerk was the market leader and Tupperware Deutschland had with modest growth in 2017. Other relevant companies include Otto, Quelle, Neckermann, Klingel, Schwab, Heine, Conrad, and Baur.

Direct Selling Europe, the DDV, and the German DSA also promote best practices in the industry.

Commercial Intermediaries

Trading Companies

 

• Type of Organization

Most of the small and medium sized companies in Germany use third parties or structures to deal independently on the market. The most significant of these are franchises, commercial agents and distributors where big companies use central purchasing agencies.

• Main Actors

The main players in the food industry distribution business are Edeka, Rewe, and Aldi. The biggest garment department store is C&A whereas hardware, Obi dominates.

Wholesalers

 

• Type of Organization

There are three types of wholesale markets in Germany: the self-service (Cash and carry) wholesale, wholesale by grouping together orders (Zustellgrosshandel) and the mass wholesale (Grossverbraucherzustelldienst) which is for the big companies' market.

• Main Actors

Edeka , Rewe , Aldi Nord, Aldi Sud, Markant (cooperative sale group in supermarket retail) and Metro (Supermarket retailer).

Useful Resources

Federation of German wholesale, foreign trade and services

Using a Commercial Agent

The Advantages

As they are paid on commission, they do not represent a fixed cost.

Where to Be Vigilant

Agents act for several firms and concentrate on the products which sell most easily.

Elements of Motivation

Participation according to turnover.

The Average Amount of Commission

20%

Breach of Contract

Council Directive 86/653/EEC establishes certain minimum standards of protection for commercial agents.

Finding a Commercial Agent

Commercial agents' organization

Setting Up a Commercial Unit

The Advantages

Setting up on locally reassures potential customers because it shows a long term commitment.

Where to Be Vigilant

Be careful of fixed costs: rent, wages, cars for sales persons.

Different Possible Forms of Settlement

 

• A Representative Office

At first sight it is provisional, less difficult to manage in case of withdrawal as it does not come under German law.

• A Branch Office

Franchise is the quickest method of forming a company for a foreigner however, it has some inconveniences.  In effect, the mother company has complete liability with regard to the operations of the franchise.  Specifically significant and large extra operating expenses could be incurred with the tax authorities when calculating taxes and liabilities.

• A Company

A company comes under German law. It is more difficult to manage but is more reassuring as far as the customers are concerned.

Franchising

Evolution of the Sector

The German franchising industry generated a turnover of EUR 122.8 billion in 2018, an increase of 9.4 %  if compared to 2017 (Germany Trade and Invest, latest available data). In 2018, around 9993 franchisors operated in Germany, with about 130,000 independent franchisees and 700,000 employed. The franchise system in 2018 was divided as following: 40% in the service sector, followed by food service, tourism and leisure as well as retail with both having a share of 24%. Skilled trades, construction and maintenance reach a share of 12%.

Some Big Franchises

Quelle, various products
Kamps, baker
McDonald's, fast food
Spar, food
Ikea, furniture

For Further Information

German Franchise Association
German Trade and Invest
European Franchise Federation

Finding Assistance

Export Trading Companies

German Investment promotion Agency