© 2023 - Boatsman Financials & 21HAVN.
Use cases
It can make sense to charge VAT when selling vehicles abroad as a dealer in various scenarios.
It is important to note that VAT regulations vary from country to country and are subject to change. It is advisable to contact a tax expert or a specialised service provider to ensure that the application of VAT makes sense in your particular case and is in accordance with the applicable laws.
For retailers within the EU, it can be advantageous to charge VAT when selling to another EU country. In this case, VAT is not invoiced but outsourced in the retailer's home country. The customer in the destination country pays the VAT in accordance with the local regulations. This facilitates trade within the EU and offers competitive advantages.
When doing business with foreign companies, it can make sense to display the VAT, as the business partners can usually claim the VAT as input tax. This can make trading with foreign companies more attractive.
In some countries, there are complex VAT regulations and bureaucratic requirements that make the sale of goods more difficult. In such cases, charging sales tax can be a way of simplifying business transactions.
Some customers abroad may prefer the net price without VAT, as they may be able to reclaim the VAT anyway. This can make your products or services more attractive to these customers.
Displaying VAT can also serve to minimise the risk of tax problems in the destination country, especially if the VAT laws and requirements are complicated or uncertain.
Brief overview
Commercial sellers in Germany are required to show prices including VAT in the amount of 19%. If a sale takes place within Germany, the buyer must pay the VAT and the seller must pay this to the tax office. In a B2B transaction, the buyer now has the option of receiving a refund of the input tax from the tax office (depending on the company: monthly, quarterly, annually).
In the case of a transaction within the EU, there is the possibility of a net sale, but this is only possible in connection with an intra-Community supply. This delivery requires special documentation and must be submitted to the tax office in the event of an audit. If it is not possible to provide this evidence during an audit, the seller will be asked to pay the 19% VAT to the tax office, even if the amount is not collected from the customer.
As sellers cannot ensure proper documentation in most cases, either the vehicle is only sold including VAT or the buyer must pay a deposit in the amount of the VAT (19%). This deposit will not be refunded to the buyer until the buyer provides the required proof of intra-Community supply.
As the potential buyers do not want to pay German tax or pay a deposit (tied-up capital), the deal may not materialise. This is where our service comes into play:
The seller can sell to us gross, pays the VAT to the tax office and thus completes the transaction. We now sell net to his customer abroad. In this case, we will have to pay the VAT until we receive it as input tax refund from the tax office. Proper documentation is essential for this.
The VAT issue when selling vehicles abroad harbours specific risks and mistakes that should be avoided to ensure successful international trade. Here are some of the most common problems:
Boatsman offers the ideal solution:
With Boatsman, you can handle your VAT filing efficiently and securely and benefit from the advantages of VAT filing. Contact us to find out more about our services and how we can support your business.
Your resulting advantages
You benefit from numerous advantages by displaying the sales tax:
By charging VAT and selling at net prices, you become more attractive to foreign customers as they do not have to pay German VAT. This allows you to lower your prices and increase your sales opportunities.
The decision to interpret VAT helps to simplify the sales process with foreign customers, as you do not have to pay German VAT. This makes the purchasing process smoother.
The option of selling vehicles to foreign customers without VAT enables you to expand your customer base across national borders. This opens up considerable growth potential for your company.
Business customers (B2B) abroad in particular, who can deduct VAT as input tax, may see this as an attractive incentive to do business with you, as they will receive a VAT refund.
The display of VAT can help to minimise tax complexities and settlements in the destination country, as you do not have to pay VAT in the destination country.
In some cases, foreign customers may be required to deposit VAT deposits to prove the export of the vehicle. The payment of VAT can circumvent this requirement.
More info
Take a look at our articles on selling vehicles abroad. Here you will find exciting news, information and tips that will help you to expand your business model!
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