At its meeting on 19 June 2020, the Federal Council opened the consultation procedure on the partial revision of the Value Added Tax Act (MWSTG) and the Value Added Tax Ordinance (MWSTV). Against the background of the further development of VAT in the digitalised and globalised economy, it proposes, among other things, comprehensive taxation of mail order platforms and simplification of invoicing for SMEs. The proposal also implements other parliamentary proposals.

The bill includes various amendments to the VAT Act, namely in the areas of tax liability, tax accounting and tax security. The most important changes are:

  • Internet mail order platforms will be taxable for all sales made through them instead of foreign mail order companies (implementation of Motion Vonlanthen 18.3540). Shipments from taxable platforms and mail order companies that do not comply with their obligations may be subject to an import ban or destroyed;
  • Introduction of voluntary annual accounting with payments on account;
  • Purchase tax liability for all supplies and services in Germany to taxable enterprises by foreign enterprises;
  • Introduction of the obligation to pay domestic subscription tax for the transfer of emission rights, certificates and the like;
  • Legal presumption that a payment designated as a subsidy by the community is also a subsidy for VAT purposes (implementation of motion WAK-S 16.3431);
  • Subordination of products for monthly hygiene under the reduced tax rate (implementation of Motion Maire 18.4205).

In order to prevent fraud, it is proposed to introduce the obligation to pay domestic purchase tax on the transfer of emission allowances, emission reduction certificates, guarantees of origin for electricity and similar rights, certificates and allowances. Until this provision of the Act enters into force, the reporting procedure will be prescribed by means of an amendment to the Ordinance.

The supplement to the media release of 19 June 2020 - Further development of value added tax in the digitalised and globalised economy lists all the measures in detail.

The following documents in particular were published as part of the consultation process:

The consultation period will last until 12 October 2020.

Tax topics covered in this post:
Value Added Tax (VAT)