What is happening?
In November 2018, the German Parliament passed a new law making online marketplaces legally potentially responsible for unpaid VAT by third-party merchants on their platforms. This is a landmark ruling as it means that Amazon and other marketplaces could be fined if they fail to ensure that sellers are handling their German VAT correctly.
The move follows similar legislation passed in the UK in March 2018 and in Italy in January 2019. The EU is going to replicate similar legislation from January 2021.
Germany is looking to reduce hundreds of millions in lost VAT revenues, much of which is believed to originate from sellers in other countries unaware of their German VAT obligations or deliberately evading VAT. The EU estimates that member states lose a total in €5billion in e-commerce VAT fraud so it is a big problem that needs to be solved.
What does this mean for me?
The legislation will require marketplaces to confirm that merchants are German VAT registered and compliance in order to have them continue selling within Germany. To prove this to marketplaces, merchants must obtain a Tax Certificate from the German tax office. Marketplaces are obliged to hold a copy of this or face being held responsible for any missing VAT of the merchant. Merchants will probably, therefore, be blocked from marketplaces if they cannot produce their Tax Certificate.
Non-EU sellers will have to appoint a postal agent to obtain their Tax Certificate. This agent must be resident in Germany.
Avalara can help!
BQool’s VAT partner Avalara is able to help companies registered for and file VAT in European Countries. If companies have VAT numbers and are filing returns correctly than there will be no danger of account being shut down. If you would like to hear more about preventing your account being suspended then please contact firstname.lastname@example.org quoting BQool and she will be able to consult on the best ways to be compliant in Europe.
This guest post is by Colin Stansbury, who is the Strategic Alliance Manager of Avalara – EMEA based out of the European office for Avalara in Brighton, UK and dedicates his time helping Avalara partners to support their customers in the complex arena of global tax compliance. Colin has an extensive background in both tax and data compliance, which includes a tenure with a 5 x Microsoft Gold digital transformations consultancy.