Online retail has decisive advantages - you can reach a much larger target group, have far-reaching marketing opportunities and move with the times. But not everything is as simple as it seems. Issues such as tax law, for example, can be downright complicated! Anyone who deals with the topic of online retail or is perhaps even an online retailer themselves has recently found it difficult to avoid a certain headline - the law to avoid VAT losses when trading goods on the Internet and to amend other tax regulations - or the tax certificate 22f. Today we would like to explain to you what is actually behind this piece of legislation, what changes it entails and what you need to look out for in the future.
What is the 22f tax certificate?
Online retail has decisive advantages - you can reach a much larger target group, have extensive marketing opportunities and go online. with the passage of time. But not everything is as simple as it seems. Topics such as tax law can become downright complicated! Whoever with the topic of online trading or perhaps even deals with it yourself. Online retailer is, who has recently been around a certain headline only difficult to get around - the law on the avoidance of sales tax losses in the Trade in goods on the Internet and amendments to other tax regulations regulations - or the tax certificate 22f. We would like to Today we would like to explain what is actually behind this law, what changes it brings and what you need to look out for in the future.
"According to § 22f para. 1 sentence 1 UStG
the operator of an electronic marketplace within the meaning of Section 25e (5)
and 6 UStG for supplies by a trader that are made on the trader's own premises.
provided marketplace have been legally established and where the
transportation or dispatch begins or ends in Germany, certain
records must be kept. This also includes the start and end date of the
Validity of the tax certificate issued to the supplier by the competent tax office
Certificate of its (sales) tax registration."
In short, this means that people who want to trade on an online marketplace must of course be registered with the tax office. The marketplace operator must protect itself and therefore request a tax certificate from each trader. This is intended to limit VAT losses in e-commerce and, in the best case, prevent them completely. The certificate in accordance with 22f contains the most important information about the retailer and their activities. This includes typical imprint information, such as the name of the entrepreneur and their address as well as the tax number and VAT identification number. In addition, the start and end date of the validity period must be stated, as well as the place of departure or dispatch of the goods, including the destination. The time and amount of sales are also listed here. Basically, all important information about the entrepreneur can be found on the certificate.
Why do I need the 22f tax certificate to sell on Amazon?
As already mentioned in the section above, every online trading platform must secure itself for the new law. Amazon is one such trading platform. Anyone who sells goods sold on Amazon - in any way whatsoever - is now obliged to present such a tax certificate in order to be able to continue selling. We have explained the background to this in more detail in the following section.
What is the background to the 22f tax certificate?
But why all the effort? The need for the 22f tax certificate has a very understandable background. Until now, anyone could offer products for sale on online marketplaces such as Amazon - regardless of which country the retailer comes from. This means that a German retailer can trade in the same way as someone based in China. This in itself is not a problem, but actually offers many advantages for both sides. The marketplace operator also benefits from a much wider range of products for customers visiting the marketplace on the Internet. However, it becomes problematic when it comes to taxes. While a Chinese retailer can avoid German VAT, a retailer registered in Germany must of course pay it. This led to enormous price differences, as foreign retailers were able to offer their goods at much lower prices than German retailers. They were therefore at a disadvantage. Many cases of tax evasion were also the result - and these were often difficult to trace.
As liability for possible tax evasion lay with the trader themselves, there were often problems that were difficult to resolve. To eliminate these problems, since 01.01.2019 the responsibility lies with the marketplace on which the retailers sell. In our case, for example, Amazon itself. However, the transfer of liability does not mean that retailers can get off the hook completely. The trading platforms must now request the 22f certificate from each provider to ensure that VAT is actually paid as soon as sales are made to Germany.
How do I get a 22f certificate?
So now you need a 22f tax certificate - but where can you get one? Applying for a certificate is much easier than it might seem at first. There are now even electronic procedures for applying. You often receive a notification from your tax advisor very promptly about when you need it and where you can get it. To continue selling on online platforms such as Amazon, it is best to go to the tax office responsible for you or to the website, if available. There you can ask for the "Application for a certificate of registration as a Taxable person (entrepreneur) within the meaning of §22 para. 1 sentence 2 UstG", or also short "UST1TJ". You can also find an example of this form here:
What needs to be entered where is largely self-explanatory. However, your tax advisor will certainly be happy to help you with this. There are also contact persons at the tax office who are familiar with these topics.
By when do I have to have the certificate?
Anyone who now thinks they need such a certificate and does not yet have it is certainly wondering whether this will have an impact on possible business plans. Unfortunately, the answer is currently: yes. The law on the 22f tax certificate was already passed on 01.01.2019. There was even a transitional period at the time to avoid having to completely change the regulations overnight. Unfortunately, these deadlines expired at the beginning of 2020. Suppliers from third countries, such as China, had until March 1 last year to obtain a VAT certificate. For German retailers, this deadline was even longer: we had until October 1 to obtain the certificate. Anyone new to trading on Amazon will probably no longer be able to avoid the certificate.
What happens if I do not have a 22f certificate?
The background to the 22f tax certificate is known to be that it puts a stop to possible tax evasion by traders.
The marketplace itself is now liable - but of course this also entails changes. So what can happen in the worst case scenario if a trader is unable to provide a 22f certificate? At first glance, this doesn't seem like a big problem. However, some platforms such as eBay threaten to delete the profile if the certificate is not available. However, you shouldn't take any risks, because the issue of tax evasion is a very serious one - and nobody wants to get into trouble here.
A missing tax certificate can even lead to the initiation of criminal proceedings for tax evasion.
The future of the 22f tax certificate
And what will happen in the future? There were already discussions last year about abolishing the certificate again. But these were nothing more than just that - discussions. So nothing has changed to date. Work is underway to further simplify the electronic application process and to set up a completely electronic procedure. However, the 22f tax certificate remains mandatory - and admittedly also has some advantages. Although the application means a little extra work for online retailers, the certificate also offers more security for e-commerce. Ultimately, the most important thing at this point is that we are safe on our online marketplaces and that everything runs correctly in accordance with the law.
And once the application has been submitted, everything remains as it was before. With this in mind, we wish you all the best and continued success!