Small Business Owners, VALUE Added Tax and Price Information Regulation

In line with this article, we would also like to provide some information on small businesses in accordance with Section 19 I UStG who sell goods via the Internet, for example, whether in their own online store and/or on trading platforms. And, of course, I have said that this also applies to all other services, not just goods.

Here, too, the problem arises as to whether prices are considered “incl. VAT’ means that a small business owner does not actually have to pay VAT. This is due to a problem with the wording of Section 19 of the Value Added Tax Act. After that:

The transactions for transactions within the meaning of Section 1 para. 1 Vat due in no. 1 is paid by traders who are resident in Germany or in the 3 designated areas are not charged,

The predominant opinion therefore assumes that, in theory, vat is included in the transactions obtained as a small business owner, but this does not have to be paid up to the ceiling. This is mainly justified by the regulation of so-called opt-outs. After that:

The entrepreneur can declare to the tax office that they are waiving the application of paragraph 1 until the tax assessment becomes incontestable (Section 18 (3) and (4)).

Small entrepreneurs can also decide to opt out retrospectively, e.g. after the sale of an item. In this case, the value added tax, which has not yet been shown separately, must be paid retrospectively. In return, you can also claim VAT against the tax office, for example, for purchases of goods or from other invoices of third parties. The latter is not possible as a small business owner. The logic therefore dictates that, purely from a legal point of view, VAT, including in the prices of small business owners, should be included.

Here too, however, great care applies when designing an online shop, for example. As long as you have not opted, you cannot/may not issue invoices with a separate VAT card and send them to your customers. This, in turn, means that customers who can claim VAT on their part cannot do so when buying from a small business owner. Of course, the buyer must be made aware of this, otherwise one risks deceiving the customer and acting anti-competitively. You may also not provide conflicting information on trading platforms or in your own shop. For example, a separate presentation of VAT (e.g. in an order confirmation or in the product overview) combined with the indication that one is a small business owner would probably also be an anti-competitive act.

As you can see, it is therefore worth it already with this supposedly simple problem that an experienced colleague with experience in the law of online retail advises the seller. Then it can also be discussed whether the small business regulation makes sense for oneself at all or whether an optimization is not already the better choice from a business point of view.

I have many years of experience on these issues and can give comprehensive advice on them.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.