Intra-community transfer, non-purchase or acquisition, VAT due in Germany?
October 15, 2010 | 40,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
we would like to solve the following question:
If a purchaser (hospital) imports goods (product code 902212) from the USA to Madrid, Spain, clears them through customs for free circulation, and then brings these goods to Germany, do they have to pay sales tax/import sales tax in Germany?
This is not an intra-community acquisition, as there is no seller in Spain. This may be - and this should be clarified - an "intra-community dispatch."
The purchaser (hospital) does not have a permanent establishment in Madrid, Spain.
Best regards,
Dear inquirer,
First of all, thank you very much for your inquiry, which I would like to answer based on the information you provided and in the context of your initial consultation. The response is provided in accordance with the description of the situation. Missing or incorrect information regarding the actual circumstances can affect the legal outcome.
The creation of the European single market and the removal of border customs posts has the consequence that cross-border services within the single market are no longer subject to import turnover tax. However, under a transitional arrangement, the destination principle still applies to commercial trade, whereby goods are generally only subject to VAT in the destination country. Unlike before, this does not tax the import, but the intra-community acquisition.
Intra-community acquisitions for consideration are equated with intra-community movements. An intra-community movement occurs when:
- a business transfers an item from its business premises
- from the territory of one Member State
- to its (permanent) disposal
- in the territory of another Member State
and the item is not only temporarily used in the destination Member State.
Threshold acquirers are generally only subject to acquisition tax if intra-community acquisitions exceed a certain amount or if a choice has been made for acquisition tax. Threshold acquirers in accordance with § 1a para. 3 UStG are also businesses that only carry out tax-exempt supplies that exclude input tax deduction (for example, hospitals regarding medical services, § 4 No. 14 et seq. UStG).
These businesses are only required to pay tax on intra-community acquisitions if the following acquisition threshold has been exceeded:
Total amount of consideration for these acquisitions in the previous year exceeds €12,500 or is expected to exceed €12,500 in the current year.
According to § 4b UStG, intra-community acquisitions of certain goods, the delivery of which would also be tax-exempt domestically, are exempt from tax.
Please note that the VAT payable on intra-community acquisitions is deductible as input tax according to § 15 para. 1 No. 3 UStG.
I hope that this information has provided you with a sufficient overview of the situation within the scope of your inquiry, and I remain
Yours sincerely
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
