Press, VAT | 4. January 2021

VAT cut ended in Germany / eClear keeps shop systems up to date

From July to December 2020, the German government had reduced VAT to 16% and 5% respectively. On January 1, 2021, Germany reverted to the previously applicable rates of 19% and 7%. eClear keeps merchant's shop systems in the EU 27 up to date with its automation solutions for tax compliance. by

For retailers, an effort is being repeated that was already described as “immense” and “torture” in June 2020 (Handelsblatt, June 5, 2020). At that time, in order to implement the temporary reduction in VAT – agreed by the German government to mitigate the economic consequences of the Corona crisis – prices had to be recalculated, indicated accordingly or re-labeled in the stores of local retailers. This must now be reversed in January.

Online retailers operating across the EU also have to face this challenge. They can look back on 2020 as a year of record sales, but those who offer and sell their goods online cross-border are still confronted with a highly complex European VAT system. And Corona has not made the current ruling any simpler: In addition to Germany, other European countries passed VAT reductions or simplified regulations last year to help the Corona-stricken economy. Of course, the aid measures differ in duration, scope and amount. Who is supposed to keep track of all this?

eClear’s Database keeps shops and systems up to date

For Berlin-based startup eClear, the challenges around VAT reduction and adjustment read like the description of its VAT automation solution launched last year: eClear’s VAT engine not only knows all VAT rates and exemptions applicable in every of the 27 EU member states for millions of products, which may well be described as unique at this point in time. – The database also dynamically keeps the merchant’s web shop and/or ERP connected to it up to date.

Updates to VAT rates must be reflected on retail invoices, no matter how short in notice and duration. Of course, this is especially true for online retailers who sell their goods cross-border to other countries in the EU. It’s a tall order that will be punished with financial loss if implemented incorrectly.

eClear’s VAT Engine delivers updates to applicable VAT rates directly into the merchant’s web shop. Manual intervention is not required. In addition to the regular VAT rates, there are numerous exceptions and regional specifics that need to be taken into account. eClear’s VAT engine dynamically provides these as well as temporary changes to connected shops and systems.

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