Introduction

A recent ruling by the Federal Fiscal Court (BFH) on 4 April 2024 has far-reaching implications for the application of the reverse charge procedure in e-commerce. In this article, we explain what reverse charge means and what consequences the judgement has for Amazon retailers.

Reverse charge procedure explained

The reverse charge procedure (Section 13b UStG) means that the tax liability is reversed: it is not the supplier who is liable for VAT, but the recipient of the service. This applies in particular to services such as advertising services and fulfilment fees that are purchased via platforms such as Amazon, Facebook and TikTok.

The current BFH judgement

On 31 January 2024, the BFH ruled that a valid VAT identification number (VAT ID no.) of the recipient is not required for the reverse charge mechanism in accordance with Section 13b UStG. This means that online retailers are liable for VAT even if they have not provided their VAT ID number.

Effects of the judgement

• Value added tax liability: Retailers must pay VAT on purchased services, regardless of whether a VAT ID number has been registered.
• Input tax deduction: Retailers can deduct the VAT paid as input tax, provided they are not operating as a small business.
• False invoices: If platforms such as Amazon or TikTok charge VAT, this is not deductible as it is regarded as 14c tax.

Focus on tax audits

The tax authorities are increasingly focussing on the reverse charge procedure in e-commerce. A recent tax audit report shows that additional payments in the five-figure range are imminent if the master data is not maintained correctly.

Conclusion

The BFH judgement highlights the importance of correctly maintaining master data and complying with reverse charge regulations. Online retailers should ensure that their VAT ID number is stored correctly and seek professional advice if anything is unclear in order to avoid additional payments. Compliance and legal certainty start with the careful maintenance of master data.