From July 1, 2020, through December 31, 2020, the value-added tax (VAT) will be reduced for a six-month period from 19% to 16%, and from 7% to 5% respectively. While this change is favorable for consumers, it necessitates substantial adjustments for online retailers.
We have summarized the key points requiring adjustment for you:
1. Observe the period from July 1, 2020, to December 31, 2020
You must ensure that all prices are correctly displayed from July 1, 2020. Furthermore, you must ensure that the VAT rates are reverted to their original levels at the turn of the year.
2. Display the correct VAT rate
You must ensure that the correct VAT rate is displayed on all pages of your online shop, should you choose to specify a particular rate. A general statement such as “including VAT” is sufficient within the online shop.
While it is not strictly mandatory to specify the exact VAT rate within the online shop, the currently applicable VAT rate must be accurately stated on all your invoices.
If you sell goods on marketplaces such as eBay, Amazon, and similar platforms, you must also verify that the correct VAT rate is displayed there.
3. Pay Attention to Your Advertising – Cease and Desist Letters Are Imminent
If you advertise that you are passing on the VAT reductions to your customers, please have us review your planned advertising, including related price displays and statements, beforehand.
Numerous pitfalls exist that could render your advertising inadmissible. In such a case, you risk costly competition law cease and desist letters and further, avoidable adjustments to your online shop.
We are readily available to assist you with any questions or clarifications regarding the reduction of VAT rates.
Attorney Michael Ullrich, LL.M. (Information Law)
Specialist Attorney for Information Technology Law
