The introduction of the One-Stop-Shop (OSS) process on July 1, 2021, has brought numerous benefits to German e-commerce companies. Nevertheless, practical application shows that e-commerce companies that use sales platforms such as eBay for their sales are confronted with significant hidden risks when creating outgoing invoices. These risks often only come to light during a tax audit.
If a German e-commerce company is registered for the OSS procedure and delivers goods to private individuals in non-German EU countries, OSS taxation generally applies. In this case, the respective local VAT of the recipient country must be shown on the outgoing invoice.
On the other hand, if the customer is an EU entrepreneur and uses a VAT ID, there is an intra-Community supply within the meaning of §6a of the German VAT Act. In this case, the German e-commerce company can issue an outgoing invoice with 0% VAT. Otherwise, if the EU business customer does not use a VAT ID, the mail order company must issue an outgoing invoice with the statutory VAT (currently 19% or 7%).
German tax authorities require e-commerce companies to identify whether their EU customers are private customers or business customers when preparing outgoing invoices. Platforms such as eBay currently offer no option in the ordering process for EU buyers to indicate whether they are private individuals or entrepreneurs, other than providing a VAT ID.
Problems with the OSS process
Our consulting practice shows that German tax authorities expect the e-commerce company to investigate when issuing invoices whether the EU customer could be an entrepreneur, for example, due to frequent orders or indications of legal forms, and thus not fall under the OSS procedure. This is mostly pure speculation and is, in our opinion, unreasonable for an e-commerce company that often handles thousands of sales transactions per month.
The entrepreneur may correct affected, incorrectly issued outgoing invoices in accordance with §14c of the VAT Act and also the advance VAT returns and annual VAT returns, if necessary. However, this is very time-consuming and can lead to a not inconsiderable temporary strain on the e-commerce company’s liquidity, especially if it has already paid sales tax as part of the OSS declaration and then has to reclaim this from the Federal Central Tax Office (BZSt) or the EU countries concerned.
It remains to be seen whether sales platforms such as eBay will adapt the ordering process in the future or whether the German tax authorities will present practical solutions that enable efficient invoicing for e-commerce companies. Until then, e-commerce companies using sales platforms such as eBay should be aware of the risks arising from the OSS process and document the procedure for categorizing private and corporate customers as precisely as possible.
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