Germany cracks down on Amazon and Ebay sales tax cheats
Angela Merkel’s government is hoping to stem the loss of millions of euros worth of VAT revenue with new, tighter regulations on online platforms such as eBay and Amazon Marketplace.
A new draft bill will demand that platforms provide more details about third party traders who are operating in the German market, the Süddeutsche Zeitung reported on Tuesday.
The draft bill, which is set to be presented this week, will also make the likes of eBay and Amazon liable for any VAT left unpaid by third party traders.
If passed, the law would lead to fairer taxation, secure tax revenues and prevent distortion of the market, sources within the finance ministry told the Süddeutsche.
Conservative estimates say the German treasury loses at least €100 million per year in potential tax revenue due to traders in other countries failing to pay VAT. Others put the figure even higher, at around one billion Euros.
Traders who sell to German customers via platforms such as Amazon are able to slip under the radar as, although they are selling into the German market, the platform takes care of shipping, storage and even facilitates payment. Without due vigilance from the platform itself, tax authorities are often unable to trace transactions back to the original seller.
The problem is particularly acute when it comes to traders in the far east, the Süddeutsche reported. On Amazon alone, there are an estimated 24,000 traders from China and Hong Kong operating in the German market.
The new law would oblige Amazon and co. to provide German tax authorities with key details about sellers using their platform, such as their name, address and tax number.
Should the platforms not meet that obligation, they would make themselves liable for any unpaid VAT.
Amazon said in a statement that it already had robust safeguards in place to deter tax evasion on its platform.
“We fully support VAT compliance and offer extensive information, training and tools to assist sellers with their VAT obligations and if we are notified by a German tax authority that a seller is not VAT compliant, we will promptly block the account," the company said in a statement on Tuesday.
"Furthermore, if we receive evidence from other parties that a seller may not meet its VAT obligations, we have processes in place for reviewing this account and taking down the seller if it does not provide us with a valid VAT number.”
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A new draft bill will demand that platforms provide more details about third party traders who are operating in the German market, the Süddeutsche Zeitung reported on Tuesday.
The draft bill, which is set to be presented this week, will also make the likes of eBay and Amazon liable for any VAT left unpaid by third party traders.
If passed, the law would lead to fairer taxation, secure tax revenues and prevent distortion of the market, sources within the finance ministry told the Süddeutsche.
Conservative estimates say the German treasury loses at least €100 million per year in potential tax revenue due to traders in other countries failing to pay VAT. Others put the figure even higher, at around one billion Euros.
Traders who sell to German customers via platforms such as Amazon are able to slip under the radar as, although they are selling into the German market, the platform takes care of shipping, storage and even facilitates payment. Without due vigilance from the platform itself, tax authorities are often unable to trace transactions back to the original seller.
The problem is particularly acute when it comes to traders in the far east, the Süddeutsche reported. On Amazon alone, there are an estimated 24,000 traders from China and Hong Kong operating in the German market.
The new law would oblige Amazon and co. to provide German tax authorities with key details about sellers using their platform, such as their name, address and tax number.
Should the platforms not meet that obligation, they would make themselves liable for any unpaid VAT.
Amazon said in a statement that it already had robust safeguards in place to deter tax evasion on its platform.
“We fully support VAT compliance and offer extensive information, training and tools to assist sellers with their VAT obligations and if we are notified by a German tax authority that a seller is not VAT compliant, we will promptly block the account," the company said in a statement on Tuesday.
"Furthermore, if we receive evidence from other parties that a seller may not meet its VAT obligations, we have processes in place for reviewing this account and taking down the seller if it does not provide us with a valid VAT number.”
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