In the case of supplies services and digital goods, a large proportion of turnover is generated via digital platforms. Influencers, streamers, and gamers generate billions in supplies via digital platforms. For VAT purposes, the question then arises as to who is providing the service to the customer: the provider or the platform as part of a deemed reseller model. The service relationships are decisive in determining whether VAT is payable in Germany.
Deemed reseller model pursuant to sec. 3 para 11a German VAT Act
According to sec. 3 para 11a German VAT Act, a taxable person is deemed to be acting in his own name and on behalf of a third party if he is involved in the provision of other services via a telecommunications network, an interface, or a portal. The national provision covers all types of other services provided via a telecommunications network (e.g., the internet).
However, the EU legal basis of 3 para 11a German VAT Act defines the scope of application much more narrowly. Article 9a VAT Implementing Regulation, which implements the EU regulation on service commissions in Article 28 of the VAT Directive, requires that the service provided must be an “electronically supplied service.” Article 9a VAT Implementing Regulation therefore only stipulates a deemed reseller model for the mediation of electronically supplied services.
Can the platform avoid the deemed reseller model?
A platform cannot avoid the deemed reseller model by expressly designating another person as the provider of the electronically supplied service. A platform is irrefutably deemed to be acting in its own name and on behalf of others if it authorises the charge to the customer or the delivery of the services, or sets the general terms and conditions of the supply. These circumstances justify, taking into account the economic and commercial reality, that the platform is to be regarded as the service provider.
See VAT Newsletter 13/2023: ECJ: No VAT for influencers on the platform OnlyFans
What are the consequences of the deemed reseller model for platforms?
For platforms, the deemed reseller model imposes far-reaching declaration and recording obligations. If the platform provides electronically supplied services and the customer is a private individual, which is the case in the vast majority of cases, the place of supply is determined in accordance with sec. 3a para 5 German VAT Act based on the customer's permanant address or usual residence. The platform must then, in accordance with Art. 24a and Art. 24b VAT Implementing Regulation, carry out a comparatively complex check to determine where the service is consumed and pay VAT in accordance with the requirements of that country. This can lead to registration obligations.
What are the consequences of the deemed reseller model for providers?
Providers suppy a B2B service to the platform, which is taxable at the platform's registered office in accordance with sec. 3a para 2 German VAT Act. If the platform is established abroad, the transactions are therefore not taxable in Germany.
New deemed reseller models through “VAT in the Digital Age” (ViDA)
The Council Directive as regards VAT rules for the digital age (ViDA Directive) contains deemed reseller models for digital platforms which facilitate short-term accommodation rental or passenger transport. Due to their enormous reach, accommodation platforms compete with the hotel industry, while passenger transport platforms compete with taxi companies. In contrast to traditional providers, private individuals and small businesses can currently offer their rental or passenger transport services via digital platforms, without incurring VAT. Deemed reseller models are intended to counteract this.
Digital platforms, which facilitate the short-term rental of accommodation / passenger transport, are treated as if they had themselves received and supplies these services (Art. 28a of the ViDA Directive). “Short-term rental of accommodation" is defined as the uninterrupted rental for a maximum of 30 days. The deemed supply of the digital platform to the customer is subject to regular taxation. The margin scheme cannot be applied to short-term accommodation rental (Art. 306 para 3 of the ViDA Directive). The supply of the lessor / driver to the digital platform is VAT exempt (Art. 136b of the ViDA Directive).
However, there are exceptions that are linked to the to the capacity of the lessor / driver. Thus, the deemed reseller model does not apply if the lessor / driver provides the digital platform with their VAT-ID and declares to the digital platform that he will charge any VAT due (Art. 28a para 1 lit. a-b of the ViDA Directive). In addition, Member States can opt out of the regulation for small businesses (Art. 28a para of the ViDA Directive).
Member States must apply the deemed reseller model from1 January 2030. However, they may already implement it voluntarily from 1 July 2028.
Vgl. auch Umsatzsteuer Newsletter 44/2024: VAT in the Digital Age (Part 1): New deemed reseller models for digital platforms
