The liability of Amazon and Co. since 2019 for unpaid Value Added Taxinvoices has led to numerous traders from third countries registering for tax in Germany.
However, a look at the figures and a recent experience report show that the federal government, the Länder and the municipalities – Value Added Tax is a so-called Community tax – many hundreds of millions of euros more Value Added Tax miss each year.
More tax registrations but probably only a fraction of the possible tax revenue
The number of online traders from third countries who have registered for tax in Germany has risen from a few hundred to almost 30,000 within two years.
This is undoubtedly an effect of marketplace liability.
However, this only resulted in sales tax revenues of EUR 200 million until the end of 2019. Estimates in advance had always assumed that the treasury would receive between 500 million and 1 billion euros per year Value Added Tax in the area of this retailer segment.
In the meantime, about 40 percent of the marketplace traders on amazon.de - by far the largest marketplace in the European Union (EU) - come from the People's Republic of China.
Home visit at the tax office Berlin-Neukölln
The following lines are from a tax expert who is in contact with the tax office Berlin-Neukölln. The person is known to us and has given us a credible account of the following statements.
I am disappointed with the technical equipment of the tax office (Note: Tax Office Berlin-Neukölln, which is responsible for all online traders from the PR China).
The tax office can now request data from Amazon and about eBay, but unfortunately it does not have the personnel to analyse this data in depth. The officials still attach great importance to the evaluation of the summary (Note: This is the one-page PDF for the overview of the monthly Amazonsales proceeds and fees). We all know that these documents/documents are actually useless, since e.g. the beginning and the end of the deliveries cannot be seen from them - not to mention an individual record according to § 146 paragraph 1 p. 1 AO.
... The actually decisive Value Added Tax -Transaction report (note: all transactions are listed individually)) knows the tax office. But it obviously has no staff, know-how or software to evaluate it.
... It is probably also related to the fact that a great many traders from China register with the Berlin-Neukölln tax office.
... I have become a big fan of digitalization and I am firmly convinced that a law firm has no future without digitalization and process optimization. But I think that in the context of digitization we must always take into account the reaction of the tax authorities. The tax office can become the biggest enemy of digitization if, for example, as in the case mentioned above, the tax officers cannot trace the VAT evaluation of all individual transactions and instead consider a one-page PDF document to be authoritative.
Experience directly from China
Bernd Glückert, an online retailer with many years of experience and a great reputation in the industry, told us the following.
Moin dear Roger, to your blog entry about the FA Berlin-Neukölln:
In Shenzhen, there are countless Amazon business coaches who - just like here - are quite painless and recommend how to exploit these weaknesses of the FA Berlin-Neukölln. Quote: "German tax authorities are not able to inspect VAT reports in detail ... no problem to declare 95 % of your goods without paying VAT".
In autumn 2019, I had visited a number of companies in Shenzhen and Ningbo and had also talked to some people there about the VATliability of the marketplaces. Thereupon they explained to me how to get around this "injustice" and in the meantime this has progressed so far that it is recommended to store in Germany despite a surcharge of 50 cents (note: this additional fee is charged Amazon for traders who store their goods exclusively in Germany) because in other EU countries the tax offices take a much closer look.
They advise you to indicate on the invoice "Origin of goods = China" and, if applicable, a Chinese freight company (Hong Kong Parcel Post etc.). De facto, however, the goods come from a European fulfillment center of Amazon.
Not only that none VAT is paid here, I also see the danger of having to pay EUSt for higher priced articles.
We want to make one thing clear in advance: These are the statements of (only) two people. However, both persons are experts with Skin in the Game.
If one considers the disproportion between tax registrations and actual tax revenue, a structural failure of the German tax authorities cannot be dismissed.
To paraphrase Bismarck, one could say that the best laws (e.g. the marketplace liability) are sometimes in vain if one does not have the personnel and technology to enforce them comprehensively.
This means that we are still a long way from a so-called level playing field for traders based in the EU and those based in third countries.
From 2021, the marketplaces will Value Added Tax for deliveries from third-country traders to customers in the EU. The extent to which this reform will be implemented next year is still questionable.
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