New VAT obligations apply not just to big players like Amazon and eBay, but also the businesses and individuals that sell via the platforms.
The German Annual Tax Act 2018 became effective on 1 January 2019 and it contained significant additional VAT obligations for the operators of online marketplaces, as well as the businesses and individuals that sell on them.
The move follows similar legislation in the UK which came into force in March 2018, whilst Austria and Italy have recently announced plans to be introduced in 2020, and the EU is planning to replicate them in 2021.
An internet marketplace is defined as "a website or any other instrument by means of which information is made available on the Internet that enables a third party to carry out transactions".
We now have further clarity on the key new requirements that will apply for these environments in Germany. Read on for a summary, and of course if you have any questions don't hesitate to contact us.
Operators of online marketplaces - which include the big players such as Amazon and eBay but also many smaller enterprises - must record the following information from their merchants and transmit it electronically to the German tax office on request:
- full name and address of the supplier
- for businesses their tax number and, if available, their German VAT ID number. For private individuals, their date of birth
- place of dispatch and arrival of the supply of goods
- time of supply and quantity of sales
- a corresponding certificate from the tax office responsible for the merchant.
The last requirement is regarded as the key one, and it will be the responsibility of the vendor to request this certificate, by completing the USt 1 TI form and sending to the relevant German tax office. This is determined by the country of establishment of the vendor. The list is available here.
When the responsible tax office receives and verifies the form they will issue a certificate confirming the status of the taxpayer and return. The taxpayer will then have to provide the marketplace with the certificate.
Consequences of non-compliance
Many marketplace operators may block merchants if they do not provide the required certificates, while tax offices may notify operators if merchants do not comply with their obligations.
It's important to note that non-EU sellers will have to appoint a VAT representative/agent to obtain their tax certificate. This agent must be resident in Germany or an authorised party in another EU country.
The marketplace owner will be held liable for VAT for supplies made via its platform if negligence can be assumed.
The marketplace liability applies with respect to non-EU merchants from 1 March 2019, and for EU-based merchants from 1 October 2019.
Talk to us
TMF Group's tax teams located in Germany and throughout the rest of Europe can assist with these additional VAT obligations in Germany, and arrange the supply of the certificates that need to be provided to the marketplace operators by vendors.
We can help you understand what the consequences are for your business, and guide you through the changes. Our local offices and VAT services team are authorised to be appointed as your local tax representative for all of your VAT requirements.
Contact us today to find out how we can help.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.