Value-added tax not paid - Fraud in EU country
December 1, 2010 | 30,00 EUR | answered by Michael Herrmann
I have a question. We sold a car to Austria. The buyer turned out to be a private individual. He only paid for the vehicle net and assured us that he would pay the 19% VAT later. Furthermore, he wanted us to issue the vehicle purchase contract in his wife's name, most likely because of the VAT ID. Now, almost 2 months have passed and the gentleman still has not paid. Today he called me and told me that out of pure goodwill he would pay an additional 3000 euros so that we don't have to pay the full tax amount. The total tax debt is 6600 euros! He said he consulted with lawyers in Austria and they told him we have no chance of getting our money back. Furthermore, the gentleman from Austria claims he taxed the vehicle in Austria because he only paid us net. If that is true, do we still have to pay the tax here in Germany? If that is not true, is it correct that we have no chance of demanding the VAT payment from him anymore? He is refusing and claims he came to us as a private individual in good faith and it's not his fault. Yet he only had the net money with him and promised to provide a VAT ID number later.
I hope for a prompt response.
Thank you in advance,
Best regards
Dear inquirer,
First of all, thank you very much for your inquiry, which I would like to answer based on the information provided and in the context of your involvement in an initial consultation. The response is based on the description of the situation. Missing or inaccurate information about the actual circumstances can affect the legal outcome.
The sale of vehicles to entrepreneurs in EU countries is tax-free. However, you must provide evidence of this to the German tax authorities. This includes the VAT identification number of the buyer and their export documents. Only if this information is available can the turnover be calculated "net".
In your case, since the buyer has not provided proof of their status as an entrepreneur, a taxable turnover is incurred. The VAT is calculated based on the gross amount, from which the VAT is deducted. The buyer owes you the agreed purchase price (gross), regardless of any taxes due in Austria (e.g. the standard consumption tax).
You should seek legal advice to enforce your claims. In my opinion, the customer cannot claim to have come to you as a private individual if they promised to provide a VAT ID number.
However, you may be criticized for handing over the vehicle before receiving full payment or before providing evidence of all the requirements for a tax-free turnover.
I hope this information gives you a sufficient overview of the situation in the context of your involvement, and I regret not being able to provide a more favorable answer.
Best regards,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
