Just recently we published two field reports that made it clear why online traders from third countries hardly Value Added Tax ever have to pay in Germany - see here.

The parliamentary group of the FDP has taken up this problem and, in the context of a small inquiry of 24 June 2020, asked the Federal Government for more detailed information on the functioning of the responsible tax offices and the amount of the tax damage.

The full text of the small inquiry can be found here.

Background: As we have been reporting for some years now, there is currently hardly any incentive for online traders from third countries - including the People's Republic of China - to pay Value Added Tax (all) in Germany. The introduction of the liability of Amazon & Co. (§ 25e UStG) has led to tens of thousands of traders from the PRC now being registered for tax purposes in Germany.
However, these lead on average (!) - This hint is important. There are also numerous companies from third countries that take the issue of Value Added Taxcompliance very seriously. - The tax authorities in charge of these companies only pay a fraction of the actual VAT liability, as they lack the resources to scrutinize the reported figures in a structured manner.

The Federal Government's response...

is more than sobering. But read it for yourself.

The complete answer can be viewed here. We have focused on the area of e-commerce and online trade.

FDP question on the data situation (Question 2)

Is the Federal Government in possession of concrete data, reports, assessments or similar information on the loss of turnover tax revenue from the taxation of foreign companies?

Answer of the Federal Government

According to Article 108 of the Basic Law, the Länder are responsible for the collection and control of these Value Added Tax data. Neither the federal states nor the federal government keep statistical records of lost sales tax revenues by foreign entrepreneurs.

FDP question on the findings of the centrally responsible tax offices (Question 3)

As far as the Federal Government is aware, do the central tax offices - note: the Berlin-Neukölln tax office is responsible for traders from the People's Republic of China - in Germany have a sufficient overview of the turnover taxation of foreign companies to be able to comprehensively record and assess losses of turnover tax?

Answer of the Federal Government

The Federal Government has no knowledge of this. Reference is also made to the answer to question 2.

FDP question on online trade (Question 7)

Does the German government have information that there are enforcement deficits in the taxation of foreign companies' turnover in the area of online trade?

Answer of the Federal Government

The Federal Government has no information on this. Reference is also made to the answer to question 5.

Conclusion

In view of the answers given by the Federal Government, it is difficult not to speak of ignorance.

Now that the VAT E-Commerce Package and the associated transfer of tax liability for deliveries from third country traders to Amazon & Co. will be postponed for at least half a year, Germany will forego a significant amount of VAT revenue for at least another six months.

The good part?

Since no data is collected, there is officially no tax damage.

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