The intra-community delivery of goods, which is the supply of goods from one Member State to another, is subject to certain tax regulations in the European Union. In particular, Article 6, Paragraph 1 of the UStG (the German Value Added Tax Act) outlines the conditions under which such a delivery may be exempt from VAT.
Tax-Free Intra-Community Delivery
The intra-community delivery of goods is a supply of goods from one Member State to another. It is subject to certain tax regulations in the European Union. Article 6, Paragraph 1 of the UStG (the German Value Added Tax Act) outlines the conditions under which such a delivery may be exempt from VAT.
Under Article 6, Paragraph 1 of the UStG, an intra-community delivery of goods is exempt from VAT if the following conditions are met:
- The delivery is made by a taxable person in one Member State to a taxable person in another Member State;
- The taxable person in the Member State of departure is identified for VAT purposes in that Member State;
- The taxable person in the Member State of destination is identified for VAT purposes in that Member State;
- The goods are transported by the seller or by a third party on behalf of the seller;
- The seller or the third party transporting the goods is identified for VAT purposes in the Member State of departure;
- The seller has received proof of exportation from the Member State of destination;
- The seller has received proof of intra-community acquisition from the Member State of destination; and
- The seller has provided the necessary information to the tax authorities in the Member State of departure.
If all of these conditions are met, the intra-community delivery of goods is exempt from VAT.
In summary, Article 6, Paragraph 1 of the UStG outlines the conditions under which an intra-community delivery of goods may be exempt from VAT. These conditions must be met in order for the delivery to be exempt. If all of the conditions are met, the intra-community delivery of goods can be made tax-free.
Innergemeinschaftliche Lieferungen, or intracommunal supplies, are an important part of international trade. The introduction of the European Union’s Value Added Tax (VAT) system has made this type of cross-border trading easier and more transparent than ever before. Art. 6 Abs. 1 of the German Umsatzsteuergesetz (UStG) makes clear that intracommunal supplies of goods are exempt from taxation in Germany.
Innergemeinschaftliche Lieferungen refer to cross-border transactions of goods between EU member states without the supply of services. Consequently, the recipient of the goods does not pay any German VAT in respect of the transaction. This is due to the fact that, in accordance with the EU VAT system, the person or entity who is liable to charge the VAT is the supplier of the goods. The supplier must charge and pay the VAT due in their own country. This is often referred to as the reverse charge mechanism.
In addition, Art. 6 Abs. 1 of the UStG provides that any company which is registered for German VAT must not charge German VAT when the goods are supplied to another EU business. Furthermore, the business must not properly evidence the intra-community supply on its German VAT return.
The EU VAT system is designed to encourage exporters from one country to another without imposing a burden of additional red tape and tax on the exporter. This is why, in accordance with the rules of the EU VAT system, intracommunal supplies of goods are exempted from taxation in Germany. This exemption simplifies the cross-border trading between two EU businesses, allowing them to freely trade without worrying about getting caught up in the German taxation system.
