VATLive > Blog > Europe > EU VAT liability on distance selling delivery schemes

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 VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2019 Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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