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Parcel center in Jinan: Chinese online retailers often do not pay sales tax on sales in Germany
Photo: Cui Pengsen / maginechina via AP
It can be found on every receipt, every fuel bill and every restaurant receipt: VAT is more present in the lives of Germans than almost any other tax.
The tax is currently receiving a lot of attention because the government has temporarily reduced it from 19 to 16 percent in the fight against the corona crisis.
But by no means everyone who has to pay value added tax or its preliminary stage, sales tax, does so.
Evasion has always been widespread in industries such as catering.
And the internet has opened up entirely new opportunities for fraudsters.
Foreign providers in particular evade VAT on a large scale and with impunity via online platforms such as Amazon.
more on the subject
Platforms like Amazon and Wish: How taxes are evaded every day in online retailBy Claus Hecking
Unfair competition: Amazon watches as China ruins German online retailBy David Böcking
Fraud on Amazon and Co.: How the state wants to stop tax fraudsters onlineBy David Böcking and Claus Hecking
Sales tax fraud: The Amazon oasis by David Böcking and Claus Hecking
In the meantime, the legislature has declared war on fraudsters and makes platforms liable for the providers who sell their goods there.
"We are ending the illegal practice of some traders on electronic marketplaces who evade sales tax," promised Federal Finance Minister Olaf Scholz (SPD) two years ago.
However, according to the Federal Audit Office (BRH), the authorities are still far from this.
"The 'tax haven Internet' must be dried up as soon as possible in order to secure the German tax revenue from Internet transactions," says a new BRH report that will be published this Thursday.
"The Federal Ministry of Finance (BMF) has not yet presented a comprehensive concept for this."
BRH President Kay Scheller also considers this to be a problem in view of the corona crisis.
"Right now the federal government should ensure that its tax revenues are secured."
Incapable software
According to the auditors, the authorities still lack important tools for tracking down tax evaders on the Internet.
Since 2003, the Federal Central Tax Office has been searching the network with a so-called web crawler for business activities that are not recorded for tax purposes.
However, in several BRH examinations, the program proved to be unable to identify foreign providers.
According to the report, the tax authorities are often blind to new employment models on the Internet, such as so-called influencers.
The tax offices "have been dealing with this segment for a long time and are also sensitized accordingly," according to the BRH.
"However, they often do not have an overview of who generates sales in this business area and how high the sales are."
There are similar challenges in industries such as e-sports, e-health and e-games.
"If Germany does not want to lose significant tax revenue, permanent monitoring of the market is essential."
However, the resources for this are often lacking.
So-called central tax offices have so far been responsible for monitoring foreign providers - for Chinese traders, for example, the Berlin-Neukölln tax office is responsible nationwide.
"The situation in Neukölln is of course: land under," said Scheller.
Due to the responsibility for the huge country "too much work ended up in Berlin".
At best, responsibility for foreign countries can also be administered in other tax offices.
The Court of Auditors recommends redistributing the tasks - if in doubt, also to fewer offices, which then concentrate fully on this task.
More registrations, more taxes?
In principle, the liability of platforms introduced under Scholz has an effect on their dealers, praise the auditors.
In the first year of validity, the number of registered dealers from China increased from around 7,500 to around 29,000.
The tax offices are "now at least known to foreign Internet providers".
However, registration does not mean that taxes will also flow.
According to the Court of Auditors, it should be easy for Internet traders to subsequently disappear from the radar of the German authorities by "making a slight change to their name".
There are "first indications of such practices. The decisive factor will therefore be the extent to which the tax offices manage to guarantee a minimum of tax control over and above the tax registration".
The tax officials could help if foreign traders name a contact person in Germany, provided that they generate taxable sales here.
There is such a "large fiscal representation" in almost all other EU countries, but not in Germany.
From the auditors' point of view, that should change.
The report also contains numerous other recommendations to the government.
New instruments for digital real-time controls of sales should be introduced, in which the authenticity of the data is best secured with the help of blockchain technology.
That sounds like "music of the future", but it has long been practiced in Italy or Spain, according to Scheller.
In general, the tax authorities would have to "become more investigative," says the BRH boss.
This is of course "a novelty".
But the days when corporate tax returns ended up on officials' desks by themselves are over.
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