The German government has been aware of VAT evasion in relation to supplies via electronic marketplaces from non-EU countries to Germany for some time now. The government and the tax authorities are attempting to combat VAT evasion. Therefore, the German government published a draft bill on the avoidance of VAT losses on supplies of goods via the Internet, which inter alia includes the introduction of a VAT liability for operators of electronic marketplaces in case the VAT is not properly paid by the suppliers. The operators of electronic marketplaces can avoid this strict liability if they ensure the actual VAT registration of the suppliers and record mandatory information about the suppliers.
The draft bill intends to introduce two new paragraphs (paragraphs 25e and 22f) in the German VAT Act (UStG). They stipulate that the operator of an electronic marketplace is liable for the unpaid VAT on supplies taxable in Germany made via the electronic marketplace.
Depending on whether the supplier is a taxable person or not, the obligations of the operator of the electronic marketplace shall differ.
Supplier is a taxable person
In case the supplier is a taxable person, the operator of the electronic marketplace is obliged to record the following information about the supplier:
- The full name and full address of the supplier
- The tax number issued to the supplier by the competent tax office and, if available, the VAT identification number issued by the Federal Central Tax Office (BZSt)
- The beginning and end of the validity of the certificate provided by the tax authorities showing that the supplier is registered in Germany
- The location of the start of the transport or dispatch and the destination
- The time and the amount of the revenue
In case the supplier is a taxable person (company), the operator of the electronic marketplace is not liable for the unpaid VAT if he can submit a certificate issued by the tax authorities showing that the supplier is registered in Germany. The certificate does not release the operator from the liability if he knew or could have known that the supplier did not fulfill its tax obligations.
The certificate is issued to the supplier for a maximum period of three years by the competent tax office. The precondition is that the supplier appoints a receiving agent located in Germany for any correspondence with the German tax authorities. The operator of the electronic marketplace will be informed on demand by the BZSt if a certificate has been issued to the supplier.
Supplier is a non-taxable person
In case the supplier is a non-taxable person, the operator of the electronic marketplace is obliged to record the following information about the supplier:
- The full name and full address of the supplier
- The location of the start of the transport or dispatch and the destination
- The time and the amount of the revenue
- Date of birth
If the supplier claims to be a non-taxable person, the operator of the electronic marketplace is obligated to check the status of the supplier as a non-taxable person by verifying type, quantity and amount of the supplies generated continuously.
If, according to the type, quantity and amount of the supplies on the electronic marketplace, the supplier is a non-taxable person, the operator of the electronic marketplace is not liable for the unpaid VAT if he records the above-mentioned information about the supplier.
Timing
The new liability regulation for supplies via electronic marketplaces is supposed to come into force on two different dates: i) for supplies carried out by third-country companies after February 28, 2019 and ii) for supplies carried out by German and other EU companies as well as by companies located in the European Economic Area after September 30, 2019.
Note
As soon as the new regulations have been adopted, companies selling goods via electronic marketplaces in Germany (with place of supply in Germany) should apply for a VAT registration certificate at the competent tax office in order to be able to present the certificate to their operator of the electronic marketplace. Otherwise, they might risk losing this business area.
