BMF letter on the applicability of Section 14c UStG in the end customer business

In brief

The BMF agrees with the ECJ’s interpretation of the Directive and restricts Section 14c para. 1 UStG (incorrect tax statement) on sales to entrepreneurs. What does this mean in practice? A sigh of relief for online retail? Not completely!

No obligation to correct

If too much tax was reported, there is now no obligation to correct it. It also follows that no repayment of the collected tax amount to the invoice recipient is required, because if no correction is required, the repayment cannot be a prerequisite for this. However, the taxable person can now deduct the reduced amount vis-à-vis the tax office and thus retroactively “generate” more margin (margin no. 15).

The fact that the invoice in question was issued to a final consumer within the meaning of the ECJ ruling must be credibly demonstrated by the trader. A reference to the general terms and conditions in which B2B sales are excluded is not sufficient here! In practice, entrepreneurs will always make concealed purchases and provide their VAT ID number hidden in address lines. Even non-household quantities must give reason to assume that the purchase is made for business purposes with the intention of resale. From our point of view, this is THE problem in online trade, as the legal consequences are completely different (country of destination vs. country of storage).

Solution via quota?

Following the referral proceedings, the BFG Vienna set a quota of 0.5% for potential “hidden B2B sales”. The BMF rejects this (para. 13). I must therefore be “reasonably certain” that the customer is an end consumer. Can’t I do that – e.g. due to concealed indication of the VAT ID number or quantities that are not customary in the household – the ECJ case law should no longer apply.

Unlike the BMF now, the ECJ did not distinguish between para. 1 and 2, as he did not have to and Art. 203 of the VAT Directive does not provide for this. In this respect, the letter has a restrictive effect. In my view, however, the ECJ’s reasoning means that the principles also apply to para. 2 transferable, provided tax has been reported and paid (e.g. actual damages instead of performance as assumed).

Practical note

The letter reinforces the FinVerw’s focus on the status of the customer – B2C vs. B2B. Entrepreneurs should therefore urgently introduce mechanisms to be able to distinguish recipients in a legally secure manner. An invoice correction for B2C returns should therefore not be necessary. You can find more details on this in an article by our partner Sven in DStR 2023, 2417.

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