Within the European Community, the exchange of goods between companies should be possible without major hindrances. Therefore, the member states of the EU agreed on special regulations for the taxation of sales. The German VAT Act (UStG) defines that an intra-Community acquisition is subject to German VAT.
According to Paragraph 1a (2) of the UStG, an intra-Community acquisition is the “transfer of an object of the company from the rest of the Community to the domestic territory by an entrepreneur at his disposal”. So, if you as an entrepreneur have goods delivered to Germany from an EU country, then this is an intra-Community acquisition.
Requirements for intra-community acquisition
If you buy goods from a company in Germany, the seller has to pay sales tax on them . If, on the other hand, you shop abroad, the German state escapes this tax. As compensation, he then levies an import sales tax, and sometimes also customs duties. In order to curb the bureaucracy within the European Union, this import sales tax does not apply to intra-Community acquisitions. However, the sales tax must be taken into account in the German tax return. This also results from paragraph 3d UStG (place of intra-community acquisition) – the turnover is achieved in the country in which the object is located at the end of the transport.
To do this, these requirements must be met:
- The purchaser must be an entrepreneur and also purchase the item for his business.
- The buyer is a legal person who is not an entrepreneur (a company, an organization, an association) or who does not acquire the item for the company.
- The delivery takes place against payment.
- There is no special regulation for a tax exemption (e.g. small business regulation )
The regulation of sales tax
According to Sportingology, the intra-community acquisition is subject to German sales tax. According to the current laws, this is the standard tax rate of 19 percent or the reduced tax rate of 7 percent. In the form for the advance VAT return , such transactions must be indicated in line 33 (taxable intra-community acquisitions at a tax rate of 19 percent) or line 34 (taxable intra-community acquisitions at a tax rate of 7 percent). You have to calculate and pay this tax.
Tax base and input tax deduction
The assessment basis is the payment for the purchase – i.e. the amount that is shown on the invoice or on another purchase receipt. As a company, you are of course also entitled to input tax for this amount. For intra-community acquisitions, you can therefore enter exactly this tax amount again in line 56 (input tax amounts from intra-community acquisition of objects) of your advance notification.
Delivery: Machine from France worth 10,000 €
Valuation as an intra-community acquisition: 10,000 €
VAT to be registered 19 percent: 1,900 €
Creditable input tax 19 percent: 1,900 €
Since it is one of the principles of proper bookkeeping in Germany that sales and costs may not be netted, you have to show both tax amounts separately. Simultaneous “counter-calculation” is not permitted.
Exceptions from the sales tax law
However, not every taxpayer has to pay sales tax for intra-community acquisitions. According to the UStG, the following exceptions are permitted:
- If you are subject to the small business regulation and therefore do not report sales tax and do not collect any input tax, then you do not have to pay tax on the intra-community acquisition.
- This also applies to farmers and foresters who only deduct sales tax at a flat rate.
- Also excluded are buyers who only make tax-free sales, for example the landlord of a house.
However, there is only a tax exemption if the annual employment amount (employment threshold) is below 12,500 euros.
This employment threshold does not always apply
However, the legislature excludes special sales from the acquisition threshold. No matter how high the sales are, sales tax is always due. This applies to these businesses:
- Acquisition of new vehicles
- Purchase of goods subject to excise duty such as mineral oil, tobacco products, alcohol and alcoholic beverages
Difference to intra-community spending
The assessment of business transactions in intra-Community traffic is complicated. In terms of taxation, a distinction is also made between intra-community acquisition and transfer. In the first case, the item is brought into Germany for permanent use and for a fee. According to Paragraph 1 Paragraph (1) No. 5 UStG, German sales tax is due. In contrast, intra-community transport remains tax-free. It is typical for such business transactions that
- the item does not remain in Germany permanently.
- the acquisition is not charged.
- the item is part of a work delivery.
A machine and plant construction company from the Netherlands brings a crane to Germany for the construction of a large industrial plant for an energy company. When the work is complete, it is transported back again. The transport of the crane is considered intra-community transport, there is no delivery to the final destination and no payment of remuneration.
If the system is set up under a contract for work and services, i.e. the Dutch company manufactures it, takes over delivery and assembly in Germany and charges the service as a whole, this is also not considered an intra-Community acquisition. Factory deliveries are assessed as other services in accordance with the UStG – the matter is taxable in accordance with Section 13b UStG.
However, if the energy company buys the industrial plant from the Dutch manufacturer to the value of € 100,000, who delivers it and erects it at the purchaser’s expense, this is an intra-Community acquisition. The buyer is an entrepreneur who is not subject to the small business regulation, the system is used permanently in Germany and remuneration is paid.