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Germany's Bundestag Approves VAT Reforms

Friday, November 16, 2018

Germany's parliament, the Bundestag, has approved the introduction of new value-added tax rules for online marketplaces.

The draft legislation, which was approved by Germany's Cabinet in August 2018, would introduce new requirements on online marketplaces to collect information on traders using their platform that supply goods or services to German consumers for VAT enforcement purposes from January 2019.

The bill will also introduce new obligations on the businesses to challenge VAT fraud on their marketplaces, and they could then be held liable for unpaid VAT if they do not take appropriate steps to prevent sales.

Following approval from the Bundestag, the legislation must be passed by the Bundesrat (the Federal Council).

The legislation would also make more attractive tax perks for electric or hybrid company cars that are also used for personal use.

The legislation will also transpose into German law provisions being adopted across the EU on vouchers and a waiver from VAT administrative obligations for small businesses providing broadcasting, telecommunications and electronic services to EU consumers.

To simplify VAT rules for startups and micro-businesses with regards to electronically supplied services, those businesses making cross-border sales to consumers worth less than EUR10,000 a year will be subject to Germany's domestic VAT rules, rather than having to comply with other member states' tax rules in the location of the consumer.

Meanwhile, the changes for vouchers would transpose the new Vouchers Directive into German law. It provides for the introduction of common rules on the treatment of vouchers from next year. It is aimed at ensuring the correct amount of VAT is charged on what the customer pays, irrespective of whether payment is with a voucher or other means of payment. It applies to any vouchers issued on or after April 1, 2019. Narrower in scope than the Commission's 2012 proposal, the Directive defines single-purpose vouchers and multi-purpose vouchers and sets rules to determine the taxable value of transactions in both cases.