Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

April 26, 2021
2021-5483

German Federal Ministry of Finance tightens marketplace liability rules

On 20 April 2021, the German Federal Ministry of Finance amended the administrative guidelines regarding the national marketplace liability rules for value added tax (VAT) purposes. The corresponding marketplace liability statutes in the national law were amended at the end of 2020, with effect from 1 July 2021. Expectations that the freshly implemented provisions originating in the European Union (EU) VAT Directive1 would lead the German legislator to dispense with the former marketplace liability rules have not been realized. Therefore, the German provisions for joint and several liability of all marketplace facilitators for VAT due from sales made via the online interface continue to apply.

Background

In 2019, the German legislator followed the United Kingdom’s lead and implemented national liability rules for online marketplaces. At the EU level, EU Member States had already agreed in 2017 on specific VAT rules according to which a taxpayer facilitating sales by merchants via an electronic interface is deemed to be the seller-of-record for VAT purposes. The EU marketplace rule will become effective on 1 July 2021. Until then, the German national marketplace liability rules will apply to all marketplace sales which are taxable in Germany.

Marketplace operators are generally liable for any underpaid VAT by merchants using the marketplace. Marketplace operators have the possibility to limit their liability through meeting certain record keeping requirements and introducing certain risk management measures. The scope of the EU rules is rather limited. From 1 July 2021, taxable transactions which are not covered by the EU rules are subject to the German national marketplace liability provisions. Accordingly, operators of electronic interfaces facilitating third-party distance sales will either be subject to the EU rule or the German national marketplace liability provisions.

Amended marketplace liability statutes

Currently, marketplace operators can limit their liability in Germany by meeting certain record-keeping obligations. Among other things, they must obtain a certificate of VAT registration from the sellers. As of 1 July 2021, this obligation will no longer exist (with a non-objection period until 18 August 2021). Instead, operators must record the seller’s German VAT identification number. In addition, the operators must validate the VAT identification number through a dedicated portal operated by the German Federal Tax Office Bundeszentralamt für Steuern (BZSt).

On 20 April 2021, the Federal Ministry of Finance issued an administrative guideline amending the existing guidelines related to the German national marketplace liability provisions. According to this guideline, operators of “marketplaces” (the term will change to ”electronic interface” in the German law as of 1 July 2021) can only get access to the BZSt’s portal for the validation of German VAT identification numbers if they register for VAT purposes in Germany and obtain a newly introduced license from their respective German tax office. This applies irrespective of whether the operators are carrying out taxable transactions in Germany or are registered for the new One-Stop Shop regime (OSS) or Import One-Stop Shop (IOSS) regime (which will be introduced effective 1 July 2021 as part of the EU e-commerce package). In the license application, operators must also provide prima facie evidence that they are actually operating a marketplace / electronic interface facilitating distance sales by third parties.

Implications

The European Commission initiated an infringement procedure against the German national marketplace liability rules shortly after they were introduced in 2019. The infringement procedure is still on-going. The amendments to the German law and the new administrative guideline introduce further obligations for operators of electronic interfaces facilitating distance sales and thereby may create new barriers for access to the German market by nonresident vendors.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young GmbH, Dusseldorf

Ernst & Young GmbH, Berlin

_________________________________________

Endnotes

  1. Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more