German legislation imposing VAT liability on online platforms is contrary to EU law, Commission asserts

The EU Commission on October 9 asked Germany to withdraw VAT changes affecting distance sales of goods sold through digital marketplaces.

The German law imposes joint and several liability for VAT due on goods being sold by EU companies through its platform when transport for the goods begins or ends in Germany.

This liability can be avoided only if the marketplace produces a paper certificate provided by the German Tax Administration to businesses selling on their electronic platform, the Commission said.

According to the Commission, the German legislation restricts free access of EU businesses to the German market in violation of EU Law.

Moreover, the new Gerrman rules are stricter than EU-agreed rules to combat VAT fraud come into force in 2021, the Commission states.

The Commission said that it may send a reasoned opinion to the German authorities if the legislation is not withdrawn withing two months.