VAT pitfalls in e-commerce within the EU

The Internet provides Austrian companies with unprecedented opportunities in the Opening up new markets in other EU member states. However, sales tax-related special considerations must be taken into account when selling goods to certain purchasers (e.g., private individuals or businesses that do not purchase the item for their business) when the goods are being shipped.

Basic rule

Basically, they are Sales of goods to private individuals controlled at the location where the Physical goods movement begins. That is, in the case of a sale from Austria (e.g., storage in Austria), deliveries (excluding new motor vehicles and goods subject to excise duty) to private individuals are subject to the Austrian sales tax.

Example: Entrepreneur AT1 sells goods (excluding motor vehicles and goods subject to excise duty) to a private customer in Italy. The goods are transported directly from Graz to Venice; the invoice is paid directly to the customer. In this case, the sale to a non-entrepreneur is therefore subject to Austrian value-added tax.

Shipping trade regulation

Special caution is always warranted when sales are made to certain customers in EU countries abroad.„on a larger scale“ take place. Then the tax assessment changes and the Sales are subject to no longer the Austrian sales tax, but the Value Added Tax des State, in which the Goods movement ends. This change is being made as Shipping trade regulation This provision is intended to ensure that a sales tax Distortion of competition to prevent, by imposing higher turnover thresholds Sales tax rate of the country of destination to be used.

At the following recipients The shipping trade regulation generally applies:

• Private,
• Entrepreneurs who do not purchase the item for their company,
• Wage earners who have not waived the application of the acquisition threshold,
• generalized farmers,
• Legal entities that are not entrepreneurs or that do not acquire the object for their own company.

The „larger scope“ from which the assessment of the sales tax changes is the so-called Delivery threshold, which are administered by each member state of the EU individual between 35.000 € and €100,000 can be set. The delivery threshold is set for each member state separately to be noted.

Example: Entrepreneur AT2 sells goods (excluding motor vehicles and goods subject to excise duty) to a private customer in France and to a private customer in Spain. In 2017, the delivery threshold in France was exceeded at €35,000, while the delivery threshold in Spain was not exceeded. The goods are transported directly from Linz to France or Spain; the invoice is paid directly to the customer. In this case, the sale to a non-French customer is therefore subject to French sales tax, while the sale to a Spanish non-customer remains subject to Austrian sales tax, as the delivery threshold in Spain is not exceeded.

Consequences

If deliveries are made to an EU member state and the Delivery threshold exceeded, Therefore, once the delivery threshold is exceeded, the sales tax law of the respective country applies, and not the Austrian sales tax law. taxation Registration in that country, there is usually required. However, the exceeding of this delivery threshold is often overlooked, which can lead to (negative) tax consequences in this country. Depending on the country and the amount of unpaid foreign sales tax, Penalties from up to 200% the unpaid value-added tax will be charged. It is therefore advisable to also charge the unpaid value-added tax when selling to the named customers. Destination country to collect – whether through its own sales accounts or through an additional input field, so that evaluation can be as simple as possible.

Tax planning options

To the Application of the delivery threshold can also an entrepreneur voluntarily give up. This is especially true in those cases advantageous, in which the Value Added Tax rate of the other country low is the sales tax rate in Austria. In this case, for example, for deliveries to private individuals in Germany 19% German sales tax is charged instead of 20% Austrian sales tax. This can lead to a disadvantage for the entrepreneur if their sales revenue remains constant.part of für den PriVAT customers his, since he is carrying goods Shop more cheaply The entrepreneur would also receive a higher net revenue, as long as the gross price remains constant.

Current thresholds in Europe

The EU Commission has published an overview in which the currently (as of March 2017) valid Delivery thresholds by country are indicated.

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