VAT treatment of removal services provided to entrepreneurs

Sales tax treatment of removal services to entrepreneurs

In terms of sales tax, it is a matter of removal services and transportation services. Transportation services are other services under Section 3(9) of the Turnover Tax Act (UStG), in which the carrier transports goods or persons. The place of a transport service depends on what is transported and to whom the transport service is performed.
In the case of a move, this is the carriage of goods. According to § 3a para. 2 UStG, the transport of goods to an entrepreneur for his company is regularly carried out where the recipient of the service maintains his company or a permanent establishment receiving the service.
An exception arises only in cases where such a transport service is provided exclusively in the territory of a third country. There is also an exception for cross-border transportation of goods. For these, tax exemptions may arise in certain cases.

The German Fritz GmbH commissions the moving company Speedy SAL from France to transport items from Paris to Marseille.
Variation 1:
The carriage of goods takes place in Norway from Bergen to Oslo.
Variation 2:
The carriage of goods takes place in Germany from Munich to the third country Switzerland to Zurich.

It is a transport service, the place of which is in Germany, since the service recipient operates his business there. Since the performing entrepreneur is a foreign entrepreneur, Fritz GmbH becomes the tax debtor.
Abwandlung 1:
But since the service is performed exclusively in the third country territory of Norway, the place of other performance is shifted back to the third country territory in deviation from the basic rule. The service performed by the carrier is not taxable in Germany, there is no German VAT.

Variation 2:
But the service is tax-exempt under § 4 No. 3 letter a double letter aa UStG. Since the service is tax-exempt in Germany, the service recipient does not become the tax debtor from the transport service provided to him.
How does the moving company recognize that a transport service is provided to an entrepreneur?
If the entrepreneur providing the service wants to prove that the service recipient is an entrepreneur who has obtained the service for his business, it must be distinguished in principle whether the service recipient comes from the rest of the Community territory or from the third country territory.
In the European Union, this is relatively simple. The proof must be provided by using the VAT identification number of the service recipient. If the recipient of the service has used a VAT registration number issued to him from another Member State, the entrepreneur providing the service can assume that the recipient of the service has received the service as an entrepreneur and also for his business, unless the nature of the service performed clearly indicates otherwise.
The entrepreneur providing the service must, however, make sure that the VAT registration number issued to the recipient of the service is correct. To this end, the validity of the VAT ID number and the name and address of the person to whom the VAT ID number has been issued should be confirmed with the Federal Central Tax Office (BZSt) in Saarlouis in accordance with § 18e UStG.
There are also corresponding automated software tools, so-called VAT ID checkers. These support and automate the queries at the Federal Central Tax Office.
If the recipient of the service does not come from a third country, e.g. Switzerland, proof must be provided in another way. Confirmations of the foreign tax authorities about the entrepreneurial status or other documents (e.g., extracts from register authorities in the third country) come into consideration here.

Note: The reproduced contents are for general information purposes. They are neither intended to nor suitable for replacing individual advice from expert persons, taking into account the specific circumstances of each individual case. Please contact your tax advisor for your individual case mandatory.