On November 24, 2025, the German cross-border e-commerce sector experienced a seismic shift – the German Federal Ministry of Finance officially implemented new tax regulations for small parcels shipped from China, completely abolishing the long-standing "22 euro tax-free allowance." All cross-border e-commerce parcels shipped directly from China to Germany, regardless of value, are now subject to a uniform 23% value-added tax! This policy profoundly impacts Sino-German cross-border trade rules, bringing a comprehensive shock to the cost structure, pricing strategies, and compliance requirements of hundreds of thousands of Chinese sellers.

I. Key Points of the New Policy: Understanding the Key Changes in 3 Minutes

1. Comprehensive Tax Coverage

Applicable to: All small-value cross-border e-commerce parcels shipped directly from China to Germany

Cancellation of Preferential Treatment: The traditional policy of "exemption from VAT for goods valued less than €22" is completely abolished; even parcels valued at €1 are subject to tax.

Effective Date: Officially effective from 00:00 on November 24, 2025, with no transition period.

2. Tax Rate and Tax Calculation Rules

Unified Tax Rate: 23% (higher than the standard 19% VAT rate in Germany)

Tax Base: The sum of the actual value of the goods + shipping costs + insurance fees

Collection Entity: Directly collected by German customs during clearance; no exemptions allowed.

3. Background of the Policy

The German government responded that this move aims to address three major issues:

First, to curb the impact of low-priced Chinese goods on domestic manufacturing (in 2024, 70% of international small parcels in Europe originated from China);

Second, to compensate for the annual tax revenue loss of over $10 billion;

Third, to protect the domestic retail industry. — Data shows that German clothing, home furnishing, and other domestic stores have lost €800 million in revenue due to the influx of Chinese goods.

II. A Fatal Blow to Chinese Sellers?

1. Crisis of "Zeroing" Profits for Low-Priced Goods

Taking a small commodity priced at €10 as an example, the new policy requires an additional €2.30 in VAT. If the original price is maintained, profits will be directly compressed by 23%; if prices are raised to pass on the costs, the price competitiveness of the goods in the German market will be significantly weakened—after all, German domestic goods only require a 19% VAT.

2. Increased Compliance Costs

Compliance Registration: Sellers need to register for a German VAT number and access the EU IOSS declaration system, and use the EU standard electronic invoice system.

Audit Risk: German customs will strengthen the verification of package values; underreporting or concealment may result in fines or even seizure of goods.

3. Reshaping of the Market Competition Landscape

The German Retail Association has clearly supported the new policy, and it is expected that domestic retailers will seize some of the market share previously held by Chinese sellers. Especially for small and medium-sized sellers relying on the "€9.90 shipping included" model, failure to adapt in time may force them to exit the German market.

III. Three Key Strategies: Lowest Cost and Highest Compliance

Key Reminder: After registering for German VAT, timely tax declarations and complete transaction records are essential to avoid audits due to compliance issues.

🟡 Logistics Transformation: Overseas Warehouses Become a "Safe Haven"

The new policy only applies to "direct mail from China" parcels. Goods shipped through German overseas warehouses are considered domestic transactions and are not subject to the 23% tax rate.

Cost Advantage: Bulk shipping costs are 30%-50% lower than single-item direct mail, and are taxed at a 19% rate.

Experience Upgrade: Delivery time is shortened to 1-3 days, and customer repurchase rate increases by over 25%.

Policy Benefits: Enjoy preferential traffic from German e-commerce platforms (e.g., Amazon Germany prioritizes locally shipped products).

🟢 Operational Optimization: From "Low Price" to "Value" Transformation

Product Upgrade: Eliminating low-margin, low-priced products and focusing on mid-to-high-end categories (such as 3C accessories and smart home products), offsetting tax costs through quality premiums.

Pricing Strategy: Adopting a "small price increase + value-added services" approach. Models (such as free after-sales service, customized services) reduce consumer sensitivity to price increases.

Platform Cooperation: Join German domestic platforms such as Amazon and utilize their tax compliance tools to simplify the declaration process.

IV. Frequently Asked Questions (FAQ) (Sellers Must Read)

Q: I have already registered for EU IOSS, do I still need to register for German VAT separately?

A: No need to register again! The IOSS system covers German tax declarations, but you must ensure that the declaration information includes complete data such as the value of the goods and shipping costs.

Q: What should I pay attention to when shipping from overseas warehouses?

A: You need to ensure that customs clearance procedures are completed when goods are imported in bulk. Overseas warehouses must have German tax registration qualifications to avoid the risk of "secondary customs clearance".

This adjustment to German VAT is essentially an inevitable trend of global cross-border trade compliance. For Chinese sellers, this is both the end of the "low-price model" and an opportunity to transform towards "branding, compliance, and localization". While struggling with the costs of the 23% tax rate, consider proactively planning for tax compliance and building overseas warehouses to establish long-term competitiveness by improving product value and optimizing service experience. After all, only sellers who can consistently provide high-quality products within a compliant framework can better establish themselves in the German market.