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The end of July, the German government approved a draft law to tackle VAT fraud in online sales. Specifically, to tighten the rules for e-commerce giants like Amazon and eBay. The German government has estimated that it loses up to 500 million euros a year in unpaid sales taxes on goods purchased from sites like Amazon and eBay and online companies outside Germany.

Finance Minister Olaf Scholz shared in a statement, “We are ending the illegal practice of some vendors on online marketplaces who evade the sales tax and unfairly give themselves competitive advantages.”

The price German customers pay for online purchases does include VAT. The problem is that foreign-based vendors never pass the taxes on to the German state. The proposed legislation would oblige online shopping platforms to track sales by third-party companies on their website. They would also be required to then pass on relevant information to the … Read more