It is a retail sell where the seller does not stock the goods in its own warehouse, instead transfers its customer’s orders to the manufacturer, another retailer, or warehouse, who ships the goods directly to the customer.
It´s mean that three parties participate in the whole process: Seller, Customer and manufacturer/ warehouse.
The drop-shipper must pay the VAT rate of the country where the delivery ends, therefore, where the final customer is located.
As a drop-shipper, if you have an order from any EU country, you must register in the Tax Authority of that EU country and comply with the VAT return. Do not sell in countries where you do not plan to register in the TA.
The drop-shipper must be aware of the Import Tax if the good comes from a Non-EU Country and reclaim.
Regarding the business expenses invoices (E.g. Amazon Services, advertising…), perhaps, you may be able to claim some expenses as tax deductions to reduce your German taxable income.
For the new drop-shippers, we advise selling only in large markets such as Germany, France, or the UK because in the market where you sell, you will have to register in the Tax Authority and that takes money and time.
Only when you have a big Ecommerce business with a high income expand your sales to smaller markets is a good idea.
Be careful about the markets you activate on Amazon. It is not a good idea to sell everywhere without thinking about tax obligations.