Shopify Business Legal Considerations

Summary

If you reside in Germany for over 6 months, you may be considered a tax resident and subject to German taxes on worldwide income. Business registration with the local trade office is generally required, even if your business is registered in Australia. Double taxation agreements between Germany and Australia can help avoid being taxed twice. Permanent Establishment (PE) involves having a fixed place of business in Germany, which may affect tax obligations. Consulting a tax advisor can provide guidance on exemptions and setting up a branch. Filing taxes in both countries may be necessary, but agreements can prevent double taxation.

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I have started my journey as a dropshipper on shopify. I recently arrived from australia about 3 months ago and have decided to reside here but im not sure for how long given that I was waiting for my slovenian passport to be renewed. My question is this. I had decided given all my uncertainty to register as a sole trader (my current only option) but in australia rather than here in germany. given that the business is based online and i do plan to eventually do business with australia as well, I find that its easier for me to handle things like taxes by having my business based in australia. Can you advise me on the lgality of all of this?
In your case, given your current residency in Rheinland-Pfalz, here are some general points to consider regarding the legality of running your dropshipping business:
- Tax Residency: If you are residing in Germany for more than 6 months, you may be considered a tax resident and subject to German taxes on your worldwide income.
- Business Registration: Operating a business in Germany typically requires registration with the local trade office ("Gewerbeamt").
- Double Taxation: Check if there is a double taxation agreement between Germany and Australia to avoid being taxed twice on the same income.
Would you like more detailed information on any of these points?
Yes, but given that my business is registered in Australia, why would I have to register it here in Germany?
If you are conducting business activities while residing in Germany, you are generally required to register your business with the local trade office ("Gewerbeamt"), regardless of where your business is registered. This is to ensure compliance with local regulations and tax laws.
Would you like more information on how to register your business in Rheinland-Pfalz?
Is there anyway around it?
If you're residing in Germany and conducting business, it's generally a requirement to register your business locally. However, you can consider:
- Consulting with a tax advisor to explore any specific exemptions or benefits under the double taxation treaty between Germany and Australia.
- Investigating the possibility of setting up a branch of your Australian business in Germany.
Would you like more detailed information on these options?
What if I'm only residing here but my business is running in other countries
If you are residing in Germany but your business operates exclusively in other countries, here are some points to consider:
- Tax Residency: You may still be considered a tax resident in Germany and subject to German taxes on your worldwide income if you reside for more than 6 months.
- Permanent Establishment: If your business activities in Germany are limited, you might not have a permanent establishment, which could affect local registration requirements.
- Double Taxation Treaty: Utilize the treaty between Germany and Australia to avoid double taxation.
Would you like more detailed information on any of these points?
Yes, I want to know more about permanent establishment
Sure! Here’s some general information on Permanent Establishment (PE):
- Definition: PE is a fixed place of business through which the business of an enterprise is wholly or partly carried out.
- Criteria: Factors like having an office, employees, or significant business activities in a country contribute to establishing a PE.
- Tax Implication: If you have a PE in Germany, you may be liable for German taxes on the business income attributable to the PE.
Would you like more detailed information on any specific aspect of Permanent Establishment?
Hypothetically, if I was to register here in Germany as well does that mean I would need to go through twice as much effort to do my taxes both in Australia and German
You may need to file taxes in both countries. However, the double taxation agreement between Germany and Australia can help to prevent being taxed twice on the same income. Consulting a tax advisor experienced in both German and Australian tax laws can provide you with tailored guidance.
Would you like more information on double taxation agreements or finding a tax advisor?