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As of next spring, German individuals who engage in significant trading on platforms may face scrutiny from tax authorities. This is a result of the new European Platform Tax Transparency Act.
The Brussels-based law establishes comprehensive reporting obligations for digital platforms to combat tax evasion and prevent black market trading. While the rules ultimately apply to all European Union member states, the national implementation of the act varies in progress.
Scope
In Germany, active private platform traders, for example, on Amazon, eBay, Etsy, and Vinted, may become the target of tax investigators if they trade more than thirty products annually on a platform or generate over two thousand euros in revenue. Marketplace trading is very popular in Germany, with Amazon as the undisputed market leader.
Reporting requirement
Large private platform sellers will not directly face the tax authorities but will be indirectly involved: it is the responsibility of the operators to share relevant data. The central German tax authority recently extended the deadline for this: initially, they had until January 31 to provide the requested information for the tax year 2023, but the platforms have now been given an extension until March 31.
The reporting deadline has been shifted to March 31.
The platforms are also scrutinized using spider software, as reported by the German digital news platform T3n. If officials identify suspicious transactions, operators must provide information about individual platform sellers, including names, birthdates, addresses, tax identification numbers, and bank details. Transaction details and sales proceeds can also be requested.
Transparency
The German government has previously stated that the legislation aims to make the “economic activities of sellers on digital platforms transparent for tax authorities.” Sellers making money on these platforms should be taxed “equally and lawfully,” according to the national law’s explanatory document.
‘Sellers should be taxed equally and lawfully.’
Accurate documentation can help prove the private nature of the sales. In such a sales log, all items with their purchase and sale prices must be meticulously recorded.
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