Sales tax liability for sales via eBay

19th December 2022

Author/s:
Attorney-at-law and tax consultant Dr. Dr. Bernd Josef Fehn

In its ruling of 12.05.2022 - V R 19/20, the Federal Fiscal Court - #Bundesfinanzhof (#BFH), referring to its ruling of 26.04.2012 - V R 2/11 (BFHE 237, 286 = BStBl II 2012, 634), has again commented on who is carrying out a commercial or professional (and thus entrepreneurial taxable) activity according to section 2 para. 1 Value Added Tax Act (#Umsatzsteuergesetz - #UStG). According to section 2 para. 1 sentence 3 UStG, this is the case for any sustainable activity to generate #income, even if there is no intention to generate #profit.

To all appearances, the present case concerned a female #reseller within the meaning of section 25a para. 1 no. 1 #UStG, who acquired items at home liquidations and auctioned them on #eBay. Over five years, she generated #income of approximately €370,000 with 3,076 #auctions. This had come out by a #tax investigation audit. The legal basis for this can be found in § 208 Fiscal Code – #Abgabenordnung/AO (tasks, competence) and § 404 AO (rights and obligations, special powers).

The #BFH has referred the matter back to the Higher Financial Court - #Finanzgericht for a different hearing and decision. The starting point of its considerations is section 12 para. 1 #UStG, according to which the #tax for each #taxable #revenue amounts to 19% of the assessment basis (sections 10, 11, section 25 para. 3, section 25a para. 3 and 4 #UStG). According to section 10 para. 1 sentence 1 #UStG, the assessment basis is the #remuneration. The legally owed #VAT has to be deducted (section 10 para. 1 sentence 2 #UStG; cf. also Art. 78 sentence 1 letter a of the Council Directive 2006/112/EC of 28th November 2006 on the common system of value added tax - #MwStSystRL). The gross revenue is reduced accordingly.

If no #VAT is due on the #purchase of the #goods (section 25a para. 1 no. 2 sentence 2 letter a #UStG), the #turnover has to be assessed according to the differential amount to the #purchase price. In the absence of #records according to section 25a para. 6 sentence 1 UStG, the #purchase price can be estimated - even with a considerable safety margin to the detriment of the #reseller - (section 162 #AO), whereby the #tax claim can nevertheless be considerably reduced. This is because these #recording obligations are not part of the material requirements of the differential taxation, which is why a violation does not generally result in the refusal of the differential taxation.