Germany's excessive additional requirements for VAT-free intra-EU shipments

Background

At my company sysmocom we are operating a small web-shop providing small tools and accessories for people interested in mobile research. This includes programmable SIM cards, SIM card protocol tracers, adapter cables, duplexers for cellular systems, GPS disciplined clock units, and other things we consider useful to people in and around the various Osmocom projects.

We of course ship domestic, inside the EU and world-wide. And that's where the trouble starts, at least since 2014.

What are VAT-free intra-EU shipments?

As many readers of this blog (at least the European ones) know, inside the EU there is a system by which intra-EU sales between businesses in EU member countries are performed without charging VAT.

This is the result of different countries having different amount of VAT, and the fact that a business can always deduct the VAT it spends on its purchases from the VAT it has to charge on its sales. In order to avoid having to file VAT return statements in each of the countries of your suppliers, the suppliers simply ship their goods without charging VAT in the first place.

In order to have checks and balances, both the supplier and the recipient have to file declarations to their tax authorities, indicating the sales volume and the EU VAT ID of the respective business partners.

So far so good. This concept was reasonably simple to implement and it makes the life easier for all involved businesses, so everyone participates in this scheme.

Of course there always have been some obstacles, particularly here in Germany. For example, you are legally required to confirm the EU-VAT-ID of the buyer before issuing a VAT-free invoice. This confirmation request can be done online

However, the Germany tax authorities invented something unbelievable: A Web-API for confirmation of EU-VAT-IDs that has opening hours. Despite this having rightfully been at the center of ridicule by the German internet community for many years, it still remains in place. So there are certain times of the day where you cannot verify EU-VAT-IDs, and thus cannot sell products VAT-free ;)

But even with that one has gotten used to live.

Gelangensbescheinigung

Now in recent years (since January 1st, 2014) , the German authorities came up with the concept of the Gelangensbescheinigung. To the German reader, this newly invented word already sounds ugly enough. Literal translation is difficult, as it sounds really clumsy. Think of something like a reaching-its-destination-certificate

So now it is no longer sufficient to simply verify the EU-VAT-ID of the buyer, issue the invoice and ship the goods, but you also have to produce such a Gelangensbescheinigung for each and every VAT-free intra-EU shipment. This document needs to include

  • the name and address of the recipient

  • the quantity and designation of the goods sold

  • the place and month when the goods were received

  • the date of when the document was signed

  • the signature of the recipient (not required in case of an e-mail where the e-mail headers show that the messages was transmitted from a server under control of the recipient)

How can you produce such a statement? Well, in the ideal / legal / formal case, you provide a form to your buyer, which he then signs and certifies that he has received the goods in the destination country.

First of all, I find if offensive that I have to ask my customers to make such declarations in the first place. And then even if I accept this and go ahead with it, it is my legal responsibility to ensure that he actually fills this in.

What if the customer doesn't want to fill it in or forgets about it?

Then I as the seller am liable to pay 19% VAT on the purchase he made, despite me never having charged those 19%.

So not only do I have to generate such forms and send them with my goods, but I also need a business process of checking for their return, reminding the customers that their form has not yet been returned, and in the end they can simply not return it and I loose money. Great.

Track+Trace / Courier Services

Now there are some alternate ways in which a Gelangensbescheinigung can be generated. For example by a track+trace protocol of the delivery company. However, the requirements to this track+trace protocol are so high, that at least when I checked in late 2013, the track and trace protocol of UPS did not fulfill the requirements. For example, a track+trace protocol usually doesn't show the quantity and designation of goods. Why would it? UPS just moves a package from A to B, and there is no customs involved that would require to know what's in the package.

Postal Packages

Now let's say you'd like to send your goods by postal service. For low-priced non-urgent goods, that's actually what you generally want to do, as everything else is simply way too expensive compared to the value of the goods.

However, this is only permitted, if the postal service you use produces you with a receipt of having accepted your package, containing the following mandatory information:

  • name and address of the entity issuing the receipt

  • name and address of the sender

  • name and address of the recipient

  • quantity and type of goods

  • date of having receive the goods

Now I don't know how this works in other countries, but in Germany you will not be able to get such a receipt form the postal office.

In fact I inquired several times with the legal department of Deutsche Post, up to the point of sending a registered letter (by Deutsche Post) to Deutsche Post. They have never responded to any of those letters!

So we have the German tax authorities claiming yes, of course you can still do intra-EU shipments to other countries by postal services, you just need to provide a receipt, but then at the same time they ask for a receipt indicating details that no postal receipt would ever show.

Particularly a postal receipt would never confirm what kind of goods you are sending. How would the postal service know? You hand them a package, and they transfer it. It is - rightfully - none of their business what its content may be. So how can you ask them to confirm that certain goods were received for transport ?!?

Summary

So in summary:

Since January 1st, 2014, we now have German tax regulations in force that make VAT free intra-EU shipments extremely difficult to impossible

  • The type of receipt they require from postal services is not provided by Deutsche Post, thereby making it impossible to use Deutsche Post for VAT free intra-EU shipments

  • The type of track+trace protocol issued by UPS does not fulfill the requirements, making it impossible to use them for VAT-free intra-EU shipments

  • The only other option is to get an actual receipt from the customer. If that customer doesn't want to provide this, the German seller is liable to pay the 19% German VAT, despite never having charged that to his customer

Conclusion

To me, the conclusion of all of this can only be one:

German tax authorities do not want German sellers to sell VAT-free goods to businesses in other EU countries. They are actively trying to undermine the VAT principles of the EU. And nobody seem to complain about it or even realize there is a problem.

What a brave new world we live in.