A cut-off date is applied to the reduced 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 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 special 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
There is no “one size fits all” solution for the change in value-added tax in an individual online shop. Merchants use different shop systems, platforms or developments, so adjustments must always be made depending on them. Many things are individually regulated, whether the display of prices on the product page and in the checkout process, notes in the terms and conditions or FAQs. 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 VAT amounts 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 answered some fundamental questions on reducing VAT rates. The background to the adjustment is explained, as well as 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.
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