Taxes & Law

This is the status of the current 2022 tax plans

Nadja Müller

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Whether Supply Chain Actwhich Property tax reform or Digital Services Act: for you as an online retailer, 2022 has already seen a lot of new legal regulations. But what about the global minimum tax that Amazon and co. will be asked to pay? And what will happen after the major VAT reform in 2021 with regard to the one-stop store in 2022? We clarify. 

The OECD tax reform is weakening

It is a major project and hardly any other tax-related news has been in the media as often as the planned global minimum tax in the past year. However, after the sensational start, the major global tax reform continues to stall.

Short and sweet: Large corporations are to pay a minimum tax of 15 percent on their profits in future. The aim is to prevent tax avoidance: Large companies repeatedly shift their profits to countries with low tax rates.

Does this affect you as an online retailer? You are probably not directly affected by the planned reform - but many of your competitors are: Large digital companies such as Amazon, Facebook and Apple are at the top of the list of "suspects" and will have to pay the tax, which is therefore also known as the "digital tax", in future.   

What do the planned rules look like in detail? The Organization for Economic Cooperation and Development (OECD) developed a 2-pillar model at the end of last year. The plan was for the EU to make a proposal in the second quarter on how it intends to implement this model:

  • Pillar 1: This affects multinational companies with an annual turnover of more than EUR 20 billion and a return on sales of more than 10% or digital companies whose customers are based in locations where they do not have a branch. Profits are to be taxed more heavily in these countries.
  • Pillar 2: Multinational companies with an annual turnover of more than 750 million pay a global minimum tax of 15 percent. The tax is expected to generate USD 150 billion in additional revenue each year.

However, the current status is sobering: a few weeks ago, the decision was made to postpone the launch from 2023 to 2024. And that's not all: there is currently also the suspicion that the US government might not be able to get part of the reform through Congress. Not only the Americans, but also some other stakeholders seem to have run out of steam. It remains unclear whether the 136 states involved are still pulling in the same direction. Whether and in what form the reform will actually be implemented in the end is therefore written in the stars.

Single-VAT-ID is just around the corner

The planned introduction of the Single-VAT-ID has more practical relevance for you as an online retailer. This is all about the more or less popular one-stop store procedure, which you as an online retailer have been able to enjoy for the past nine months. Since July 2021, there has been a uniform EU-wide delivery threshold of 10,000 euros. If you exceed this threshold with all the sales you generate across the EU, you have to pay VAT in that country. So that you do not have to register in each individual country, there is a central registration and payment office (One Stop Shop). In Germany, this is located at the Federal Central Tax Office and since last year you can report all sales together and pay the tax there.

A further simplification is now planned for the third quarter: Until now, as an online retailer, you have to register for VAT in all EU countries where you have stock. This is impractical. For this reason, a uniform VAT ID - i.e. a uniform VAT identification number - is now to be introduced. Your advantage: You can store your goods closer to the customer and deliver them faster. As a result, this would strengthen cross-border trade within the EU.

There is no clear regulation yet. Sometimes no news is good news. After all, there are still a few months left until the third quarter. Let's hope that the parties involved don't run out of steam as quickly as the 136 states that are to implement the global minimum tax. In any case, online retailers are likely to become uncomfortable if everything does not go according to plan. After all, a study conducted by ibi Research at the end of last year showed that not every online retailer is enthusiastic about the new OSS or copes well with it. You can also read our article "Online retailers: divided reaction to OSS".

2022 has already seen some changes for you as an online retailer. The next prank is the global minimum tax and the single VAT ID. The only question is who will fall flat on the home straight, who will implement their plans on time and whether you as an online retailer will actually benefit from the new regulations in the end.

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