On 2 September 2020, the German government adopted the cabinet draft ("UStG-E") for the Annual Tax Act 2020 ("JSTG 2020"). The draft contains several regulations for the implementation of the digital VAT package. The draft regulates the assumption of a fictitious chain transaction in e-commerce business under certain conditions. Furthermore, significant adjustments are made to the taxation procedure for the e-commerce sector. The Federal Council issued its opinion on the draft on 9 October 2020. The regulations are expected to come into force on the day after promulgation or from 01.04.2021, Art. 34 UStG-E.
According to the new regulations, the sale of goods via an electronic platform or an electronic marketplace is deemed to be a chain transaction, whereby special regulations apply. The online marketplace is thus included in the supply chain and therefore subject to taxation in a similar way to commission business. The supply of goods within the EU or from a third country to a recipient in accordance with Section 3 (3a) UStG-E (private individuals, etc.) is defined as a distance sale. The place of taxation of distance selling will be the place of consumption, sec. 3c para. 1 UStG-E.
In addition, a simplified taxation procedure, a one-stop shop procedure for intra-Community distance selling (OSS for short) is to be introduced (OSS replaces MOSS). This is a special taxation procedure for the online trade of goods, which enables an entrepreneur to pay VAT amounts due in other EU countries centrally. Online traders can report both their intra-Community distance sales and their local sales processed via an electronic interface via OSS. On the other hand, the operator of the electronic interface (e.g. online marketplace) will in future be able to report sales that are subject to the chain transaction fiction of Section 3 para. 3a sentence 1 UStG-E in the OSS.
The new Import-One-Stop-Shop (IOSS) is to be introduced for distance sales from third countries.
Entrepreneurs with corresponding digital business models should review their processes in good time and, if necessary, reorganise them with regard to the VAT changes. Your TAXGATE team will support you with the analysis and implementation.
