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Taxes and bookkeeping for online entrepreneurs selling digital products and services
Templates, digital products, memberships and online services: if your business runs online, your bookkeeping should too.
Typical tax topics for digital businesses
1. Digital products for customers across Europe
For digital products sold to consumers in other EU countries, VAT in the customer’s country applies once relevant EU-wide annual turnover exceeds €10,000. You report these sales together through OSS. Business customers with a VAT ID instead receive an invoice without German VAT under reverse charge.
2. Platforms and payment providers
Digistore24, Gumroad, Stripe or PayPal: platforms bundle payouts and deduct fees. For bookkeeping, what matters is who your legal customer is. With reseller platforms, the platform itself is your customer, not the end buyer.
3. Advertising with Meta and Google
Meta and Google invoices generally come from Ireland. They contain no German VAT. You account for VAT under reverse charge and deduct it as input VAT if eligible.
4. No till, no cash
Digital businesses take payments through banks, cards and payment providers. That means no cash book or till system. Each payment leaves a digital trail, making bookkeeping easier.
5. Electronic invoicing
Since 2025, businesses in Germany must be able to receive electronic invoices from other businesses. From 2027, businesses with prior-year turnover above €800,000 must also issue them; from 2028, the requirement extends to other businesses, subject to statutory exceptions.
Bookkeeping, duties and deadlines
Bookkeeping: A UG (entrepreneurial company) or GmbH (limited liability company) is a commercial entity by legal form. You must keep double-entry books under the German Commercial Code (HGB) and prepare a Jahresabschluss (annual financial statements) each year, comprising a balance sheet, profit and loss account and notes. Micro-entities may omit the notes.
Annual financial statements: For small companies, you have up to six months after the financial year ends to prepare the statements. You must disclose them in the Unternehmensregister (company register) within twelve months of year-end. You submit them electronically to the Finanzamt (tax office) as an E-Bilanz (electronic tax balance sheet).
Annual tax returns (you file by 31 July of the following year if filing without a tax advisor):
- Corporation tax return: 15% of profit plus a solidarity surcharge of 5.5% on that tax
- Gewerbesteuer (trade tax) return: based on your municipality’s assessment multiplier
- Annual VAT return
- Investment income withholding tax notification if your company distributes profits
Ongoing: You file advance VAT returns monthly or quarterly, depending on the previous year’s VAT, by the 10th of the following month (one month later with a permanent filing extension). Corporation tax prepayments fall due on 10 March, June, September and December; trade tax prepayments on 15 February, May, August and November.
Record retention: Keep supporting documents such as invoices and bank statements for eight years, and books and annual financial statements for ten years.
You can manage your bookkeeping, prepare annual financial statements and create tax returns in Pluto. Employee payroll, non-standard international matters, tax groups, transformations and tax audits are outside its scope.
Frequently asked questions
Do I need a tax advisor as an online entrepreneur?+
You remain responsible for your company’s bookkeeping, Jahresabschluss (annual financial statements) and tax returns. A tax advisor can help with complex matters such as restructuring or tax audits.
Which VAT rate do I charge on digital products?+
For customers in Germany, usually 19%. For EU consumers, VAT in the customer’s country may apply through OSS. For EU business customers, reverse charge usually applies.
Pluto Tax is a software tool that supports you in preparing your own tax returns. It does not provide tax advice within the meaning of the German Tax Advisory Act.
Updated: October 2026