GER: Entrepreneurial Status for eBay Sales

Dec 16, 2022 Benn-Ibler Rechtsanwälte

If a seller sells goods in several hundred auctions per year on the eBay internet platform, this constitutes a sustainable activity and is therefore considered an entrepreneurial activity for VAT purposes. In addition, the German Federal Fiscal Court (Bundesfinanzhof, BFH) ruled that missing records and, thus, violation of the obligation to keep purchase records shall not prevent the margin-tax scheme from being applied.

In the case at hand, the plaintiff had acquired numerous items from household clearances between 2009 and 2013, then offering them for auction on eBay’s internet auction platform. For this purpose, the plaintiff opened four eBay accounts as well as two bank accounts. Over the five years, she sold items at approximately 3,000 auctions, earning roughly EUR 380,000. She did not file a tax return.

In the court's opinion, this income is subject to income tax, trade tax, and VAT. The plaintiff had not only sold private assets, but based on an assessment of the facts had also acted like a typical retailer The plaintiff complained that she should not be regarded as a trader, as she had neither a business concept nor an organisation nor any previous knowledge of trading. She occasionally bought from household clearances and resold the items on eBay for a minimum bid of EUR 1. As in a lottery, it was uncertain whether there would be any profits at all. However, the court emphasised that the existence of an intention to make a profit is not relevant under VAT law.

In its ruling, the BFH stated that the case was not yet ready for decision, in particular with regard to the lack of margin-scheme taxation.

The margin-tax scheme is a special provision of the German Value Added Tax Act and is an advantage for traders and resellers of second-hand goods. If margin taxation is applied, the VAT is not calculated based on the sales price but instead on the difference between the sales price and the purchase price.

The lack of purchase records does not impede the application of the margin-tax scheme. In this case, it is possible to estimate the taxable amounts.

BFH, V R 19/20 (12 May 2022)