New value-added tax (Umsatzsteuer) regulations commencing as of 1 January 2015
> December 2014
There is a question whether and where sales tax is to be paid for cross-border transactions and especially for contracts entered into online.
Die europäische Richtlinie 2008/8/EG („Mehrwertsteuer-Paket“) hat bereits zum 01. Januar 2010 zu einer Umstellung auf das Bestimmungslandprinzip bei zwischenunternehmerischen („B2B“) sonstigen Leistungen geführt und diese damit weitgehend den zwischenunternehmerischen Lieferungen gleichgestellt. Wenn der Leistungsempfänger und der Leistungserbringer in verschiedenen europäischen Ländern ihre Unternehmen betreiben, schuldet der Leistungsempfänger die Umsatzsteuer an dem Ort, an dem er sein Unternehmen betreibt. Von dieser Änderung waren nur Leistungen betroffen, die an umsatzsteuerliche Unternehmer, also nicht an Privatpersonen erbracht werden.Ab dem 01. Januar 2015 erfolgt nun in allen EU Mitgliedstaaten ein weiterer Schritt des Mehrwertsteuer-Pakets. Nach der neuen Regelung sind folgende Leistungen an Nichtunternehmer („B2C“) an dem Ort zu versteuern, an dem der (private) Leistungsempfänger seinen Wohnsitz oder gewöhnlichen Aufenthalt hat:
+ Telekommunikationsdienstleistungen (z.B. Festnetz-, Mobilfunk- und Internetleistungen),
+ Rundfunk- und Fernsehleistungen und
+ auf elektronischem Weg erbrachte Dienstleistungen (Leistungen, die über das Internet oder andere elektronische Netze erbracht werden, also z.B. Bereitstellung von Websites, Webhosting, Fernwartung von Programmen, Bereitstellung von Software und deren The European Directive 2008/8/EC (“VAT Package”) had led to a change in the destination principle for business-to-business (B2B) miscellaneous services as of 1 January 2010 and, in so doing, made such by and large the equivalent of business-to-business deliveries. If the party receiving the services and the party rendering the services are operating their companies in different European countries, then the party receiving the services shall owe the value-added tax wherever it operates its enterprise. The only services affected by this change were those rendered for a taxable entrepreneur: i.e., not for private persons.
Commercing as of 1 January 2015, an additional step of the VAT Package shall be taken in all EU Member States. Under the new regulation, the following services rendered for non-entrepreneurs (B2C) are to be taxed wherever the (private) services recipient has his or her residence or permanent residence:
+ telecommunication services (e.g., landline, cellphone, and internet services);
+ radio and television services; and
+ services rendered electronically (services rendered online or other electronic networks: viz., for instance, providing websites, webhosting, remote program maintenance, providing software and the updating thereof, providing images, texts, information, databanks, music, films, games, long-distance learning services).
Goods deliveries ordered online are not affected by the new regulation.
The consequence is that European companies in every EU Member State wherein they render services for private customers/clients shall be subject to the respective local value-added tax regulations and, by extension, the correspondent reporting duty. Commencing as of 1 January 2015, the services shall therefore be charged in each EU Member State with the value-added tax applicable in each such Member State. Because the value-added tax rates in the European Union vary from 3% to 27%, the business effects including, but not limited to, those in relation to pricing can be considerable.
In order to prevent affected companies from having to register in each and every country for value-added tax purposes, the VAT Package contains an exception regulation in the so-called mini-one-stop-shop process. Such prescribes for companies that a central declaration and payment of value-added tax arising from the said services is capable of being effected to the competent national authority (in Germany, it is the Federal Central Tax Office). The declaration must be available as of the 20th day after quarter’s end and the payment can be rendered in the country in which the company has its seat. The competent authority shall then assume the allocation to the individual countries.
Whether your company is affected by the new regulation for cross-border services should be reviewed over the short term so as to be able (i) to implement any necessary changes in internal processes, pricing, and IT systems and (ii) to modify any agreements and general terms and conditions of business. Since 1 October 2014, registration it has been possible to register with the German Federal Central Tax Office for the mini-one-stop-shop-process, and the registration should be prepared as soon as possible, together with the processes for reporting the information to be declared. Additional information regarding the registration process and the reports are available from the German Federal Central Tax Office (in German).
