It’s crucial to grasp the changes in VAT rates, which occur at midnight on 1 July. The time of turnover performance is the critical factor for VAT accrual, not the invoicing or contract conclusion. In online shipping, the specifications for moved deliveries are applicable, with the start of the goods’ transport being decisive. For instance, the reduced VAT rate applies if goods are ordered on 29 June but dispatched from the warehouse on 2 July. However, the previous VAT rate applies if the goods were already transported on 30 June. It’s essential to ensure the invoice reflects on 1 July. The time of turnover performance is decisive for the accrual of VAT; neither the invoicing nor the conclusion of the contract is relevant. In online shipping, the specifications for moved deliveries apply. Thus, the time of the beginning of the transport of goods is decisive. If the goods are ordered on 29 June but dispatched from the warehouse on 2 July, the reduced VAT rate applies. The previous VAT rate applies if the goods were already transported on 30 June. The invoice must show the correct rate.
A particular case occurs when exchanging goods. When a purchased product is returned, the original delivery is cancelled, and a new delivery is made. So, if the customer exchanges a product delivered in June after the deadline, the retailer must apply the VAT rate of 16 per cent to the delivery of the replacement item.
Implementation in the shop
Adapting to the change in VAT rates is not a one-size-fits-all solution for individual online shops. As merchants use different shop systems, platforms, or developments, adjustments must be made based on these factors. Many aspects are individually regulated, such as the display of prices on the product page and in the checkout process, as noted in the terms and conditions or FAQs. For instance, some merchants add the words “incl. 19% VAT plus shipping” to the price or “The offers are incl. 19% VAT” in the item descriptions. These need to be tailored, as do legal texts with explicit references to VAT amounts. A comprehensive checklist of what needs to be implemented in the online shop by 1 July 2020 can be found on the Händlerbund website, empowering you to take control of the necessary adjustments.
On its homepage, the Federal Ministry of Finance (BMF) has answered some fundamental questions about reducing VAT rates. The adjustment’s background is explained, as is information on the cut-off date and delivery times for goods and orders abroad. The draft of the BMF letter with all details is also available.
