Operators of Internet marketplaces should be liable for VAT of their dealers!
The German Government wants to prevent VAT losses in trade with goods on electronic marketplaces on the Internet (e.g. eBay). For this reason, section 22f of the Value Added tax Act was introduced that is intended to make operators of Internet marketplaces more responsible.
Who is concerned?
An electronic marketplace in the sense of the proposed provision is “a website or any other means by which information is made available over the Internet which enables a third party not operating the marketplace to carry out transactions”. The concept is therefore very broad.
Operator is “anyone who maintains an electronic marketplace and enables third parties to carry out sales on this marketplace”.
A multi-stage system is planned to secure the VAT revenue from deliveries via these marketplaces. A distinction is made between professional traders and private providers.
Obligations of operators
Operators are obliged to provide information from companies whose turnover in Germany is subject to turnover tax. These are:
– Name and address of the entrepreneur,
– the tax number or VAT identification number of the entrepreneur,
– Start and end dates of validity of a certificate of tax registration of the trader,
– Place of commencement of transport or dispatch and place of destination,
– Time and amount of turnover.
The certificate must be applied by the respective entrepreneur at his tax office and is issued for a limited period of time. Entrepreneurs who are resident in a third country (e.g. China) must also nominate an authorized recipient in Germany.
Once an electronic certification procedure has been set up, the Federal Central Tax Office issues the operator with information on the certificates stored there by means of an electronic query. The Federal Ministry of Finance will inform the operator when electronic consultation will be possible by means of a letter to be published in the Federal Tax Gazette.
Please note: Until the introduction of the electronic enquiry procedure, the supplier must be issued with the certificate in paper form.
If persons register on the operator’s electronic marketplace as private individuals, the date of birth must also be recorded. Not required: Tax number or VAT identification number as well as a certificate.
Upon request, the operator must electronically transmit the recorded data on entrepreneurs and private individuals to the tax office.
Liability of the operator
If a trader does not properly pay VAT, the operator of the marketplace may be held liable in case the supply subject to VAT was legally justified on the marketplace.
Operators can exclude liability if they can submit a certificate (or an electronic confirmation after the introduction of the query procedure).
Please note, that a certificate does not protect the operators to the extent that they should have known, after exercising the diligence of a prudent businessman, that the supplying company is not fulfilling its tax obligations or is not fulfilling them in full.
The tax office can inform the operator that an entrepreneur is not complying with his tax obligations if other measures do not promise immediate success. The operator is then liable after receipt of the notification if the legal transaction underlying the turnover was concluded after receipt of the notification. A present certificate does not protect then.
The operator is not liable, if the registration took place on the electronic marketplace as a private person and the operator has fulfilled his recording duties.
Please note, that this does not apply if it can be assumed from the nature, quantity or amount of the sales achieved that the operator was aware of this or should have been aware that the sales were generated within the framework of a company after exercising the diligence of a prudent businessman.
In principle, the new regulations are to come into force from 1 January 2019. However, liability for third-country entrepreneurs is not to apply until 1 March 2019 and for domestic and EU/EEA entrepreneurs until 1 October 2019.
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