Entré
Not too long ago, German lawmakers decided that marketplaces can be held liable in the future if merchants do not pay their sales tax correctly to the German treasury. With this, the government wants to counteract the constant VAT fraud by companies based outside the EU.
However, in order not to create a bureaucratic monster for the marketplaces, there is an exemption. This states that the marketplace cannot be held liable if it can prove that the online merchant has registered for tax purposes and has fulfilled its reporting obligations.
For this purpose, the so-called UST 1TJ form was created. With this, the certificate UST 1TI is issued by the responsible tax office at the request of the online merchant. This certificate is then given to the marketplace and serves as proof that the online trader is a loyal taxpayer.
Why it could not work
Well, on the whole this was not a bad idea, at least a step in the right direction. Nevertheless, one can criticize the execution.
This is not least due to the fact that such short deadlines were set here. So it was decided that the online traders are divided into 2 groups and your certificate should be submitted to the marketplaces by the following dates:
- Online retailers from Germany and the EU: 30.09.2019
- Third country online merchants: 28.02.2019
And just the latter, that was clear to all parties from the outset, was pure wishful thinking. It was only on 17.12.2018 that the Federal Ministry of Finance published the sample forms for the application and the certificate for online traders. The fact that now within two and a half months the applications for all traders from the third country, especially from China, are made, processed and sent, could not work already theoretically.
The consequences
Originally, an electronic solution for the exchange of data between the financial administration and the marketplace was being discussed. A solution that could certainly have been solved easily, quickly and practically by the marketplaces. They have a lot of experience with interfaces. On the other hand, however, there is a paper tiger that outwardly appears to be deliberately avoiding any kind of digitization. Either by simply not implementing solutions electronically or by complicating them to such an extent that they are impractical and unnecessarily complicated.
It was therefore foreseeable that a digital solution in 2.5 months is unrealistic. Presumably, the preparation of the tender documents already takes longer. What would have taken experienced developers only a few weeks will hopefully not become a second BER.
In order to be able to provide the certificates, however, the good old paper is used. But here, too, it is apparent that the deadlines have been set too tightly. Not for the online retailers who have diligently filled out their applications, but rather for the tax authorities themselves.
For this reason, they now had to give in and the deadline for online retailers from the third country is extended from 28.02.2019 to 15.04.2019. The corresponding letter reads a bit strange and makes it seem as if they do not want to admit their own failure. For example, it states:
Until April 15, 2019, it will not complainsif the operator of an electronic marketplace, instead of the certificate of registration as a taxable person (entrepreneur) pursuant to Section 22f (1) sentence 2 of the VAT Act for the entrepreneurs referred to in Section 22f (1) sentence 4 of the VAT Act, has received the application for issuance of the above certificate (in electronic format or as a printout) submitted to the competent tax office by February 28, 2019.
Last but not least, we have even been able to read in some media that the VAT ID of a domestic online retailer has been hijacked and used by online retailers from the third country. In addition, it has already become known in one case that Amazon itself is sticking to the deadline of 01.03.2019.
Conclusion
The idea was good, the execution was miserable. Whoever thought that would work until 28.02.2019 has probably thrown darts at the calendar. With a reasonably realistic view, it immediately becomes clear that the tax authorities are not capable of generating a certificate across the board within two and a half months. This is a good example of decision-makers out of touch with reality, outdated technology in the administration and bureaucracy that gets in its own way.
Those who still want to read the letter extending the deadline in its entirety can do so here: 2019-02-21-liability-for-sales-tax-when-trading-with-goods-on-the-internet
