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German conflict on EU ecommerce VAT package

  • Oct 13, 2020 | Richard Asquith

Germany’s tax plans includes the implementation of the EU’s VAT ecommerce package. However, it leaves in place the German marketplace VAT liability for platforms to check their EU sellers have a regular VAT registration in Germany. This is contrary to the aims of the EU VAT ecommerce package.

The ecommerce package introduces the single, pan-EU One-Stop-Shop VAT return for distance selling VAT transactions. It enables EU and non-EU sellers to avoid having to VAT register in each member state where their customers are located. Instead, for B2C distance sales, the seller can just complete a single OSS return in their country of residence (EU sellers) or member state of identification (non-EU sellers).  This means the seller no longer has to have multiple VAT registrations around Europe for distance selling. However, if they chose to hold stocks in other EU states, for example under Amazon's fulfilment service, this generally still requires local non-resident registrations to report the movement of goods between states.

The German marketplace VAT liability rules could mean, for example, a French seller could use the OSS return to report their German distance sales but would still require a German non-resident VAT registration to provide marketplaces proof of their German tax ID registration certificate from a German tax office.

The European Commission started in October 2019 infringement proceedings against Germany for its insistence on a manual / paper-based application for the marketplace tax registration certificate.

The ecommerce package seeks to: reduce VAT registrations for distances sellers via a single OSS VAT return; withdraw the €22 VAT exemption import threshold; and introduce a new IOSS import VAT declaration. It also seeks to make marketplaces the deemed supplier and responsible for VAT obligations of their third-party sellers on certain transactions - imports not exceeding ≤150 and all non-EU sellers.

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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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