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 ongoing. 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
- Matthias Luther
Ernst & Young GmbH, Berlin
- Florian S. Zawodsky
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
