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EU VAT liability on distance selling delivery schemes

  • Jun 30, 2020 | Richard Asquith

The European Court of Justice has given a preliminary ruling this month on the VAT distance selling liabilities of sellers. Case No. C-276/18

The case concerned a Polish seller with Hungarian customers. The seller had referred sellers any online sale to a Hungarian third-party delivery firm. On this basis, that it was not responsible for the transport of the supply, it did not consider the transaction as a cross-border B2C sale under the distance selling rules. Even though the Polish seller was over the Hungarian threshold of €35,000, it did not register in Hungary and charged Polish VAT instead. This was accepted by the Polish tax office.

The Hungarian tax office considered that this artificial construct – the seller was effectively providing a controlled, related-party delivery services – did not excuse the seller from the Hungarian VAT net.

The ECJ upheld the Hungarian view. It confirmed that one member state may unilateral impose VAT on a transaction already taxed by another member state. It held the Polish supplier initiated the transport and was therefore providing a cross-border supply.

Note: the EU will close this loophole in 2021 as part of the EU VAT e-commerce package.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara
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