A cut-off date is applied to the reduction in value-added tax: the changes come into force at midnight on 1 July. The time of performance of the turnover 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. This means that if the goods are ordered on 29 June but are not dispatched from the warehouse until 2 July, the reduced VAT rate applies. If the goods are already transported on 30 June, the previous VAT rate applies. The invoice must show the correct rate.
A special case occurs when exchanging goods. When a purchased product is returned, the original delivery is cancelled and a new delivery is then made. So if the customer exchanges a product delivered in June after the deadline, the retailer must apply the VAT rate of 16 percent to the delivery of the replacement item.
Implementation in the shop
There is no “one size fits all” solution for the change in value added tax in individual online shop. Merchants use different shop systems, platforms or their own developments, so that the adjustments always have to be made depending on them. Whether the display of prices on the product page and in the checkout process, notes in the terms and conditions or FAQs – many things are individually regulated. For example, some merchants add the words “incl. 19% VAT plus shipping” to the price or “The offers are incl. 19% VAT” in the item descriptions. Of course, this has to be adapted, as do legal texts in which explicit references to the amount of VAT are made. A comprehensive checklist of what must be implemented in the online shop by 1 July 2020 can be found on the Händlerbund website.
On its homepage, the Federal Ministry of Finance (BMF) has provided answers to some of the basic questions on the reduction of VAT rates. The background to the adjustment is explained, as well as information on the cut-off date, delivery times for goods and orders abroad. The draft of the BMF letter with all details is also available.