Impact also for electronic B2C services supplied to customers in Germany
Since 2007 the applicable regular VAT rate in Germany has been 19%. On June 29, 2020 the German Bundestag has adopted the second stimulus package to speed up Germany’s recovery from the coronavirus. It comprises a number of simplifications and reliefs for tax payers including the reduction of the regular VAT rate from 19% to 16% and the reduced VAT rate from 7% to 5% for the period from 1 July to 31 December 2020 Gesetze im Internet. Additional information has been published in the accompanying letter of the Federal Ministry for Finance of 30 June 2020.
Background: Since 1 January 2015, telecommunications, broadcasting and electronic services are subject to VAT in the country where the customer is located. Electronic services are determined by Exhibit II of the VAT directive 2006/112/EC and comprise web-hosting, supply of software, supply of music, films and games including games of chance and gambling games or distance teaching.
Consequences for suppliers: All suppliers providing services to customers located in Germany will have to assess and implement the consequences of the VAT reduction for the time from 1 July to 31 December 2020. This also applies to providers who are filing their VAT submissions by using the Mini One Stop Shop (MOSS) procedure.