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If a German entrepreneur incorrectly treats an intra-community delivery as free of VAT although certain requirements are not fulfilled, the VAT exemption in Germany nevertheless applies provided the entrepreneur can show that he used due care in making the incorrect determination. A prime requirement for exemption from VAT in the country of origin is that the transaction is subjected to VAT in the country of destination. This is only guaranteed if the buyer is using a correct name, address, and VAT identification number (ID number). The seller probably cannot fulfill his duty of due care merely by relying on the data supplied to him by the buyer.
However, a procedure exists whereby the seller can request information on the buyer from the German Federal Office for Finance (Bundesamt fuer Finanzen) in Saarlouis. This procedure has recently been improved with respect both to speed and convenience and with regard to the scope of the information supplied. Using this information, the seller can verify the data supplied to him by the buyer. As long as there are no discrepancies and no other reasons to suspect inaccuracies in the buyer's data, an entrepreneur who has availed himself of this service of the Federal Office for Finance would appear to have fulfilled his duty of due care. However, it should be noted that there is as yet no case law on this point. It at any rate appears likely that a seller who has failed to make use of this opportunity for verification will not have fulfilled his duty of due care at least where the information he would have received, had he requested it, would have given rise to doubts.
It is therefore advisable to take advantage of the improved information service.
Disclaimer and Copyright
This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. We in particular insist that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While our articles are carefully reviewed, we can accept no responsibility in the event of any inaccuracy or omission. Any claims nevertheless raised on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Deutsche Treuhand-Gesellschaft AG (KPMG Germany). Distribution to third persons is prohibited without our express written consent in advance.
