Are used car dealers small business owners?

Order of 7.2.2018 / File: XI R 7/16

The Court of Justice of the European Union (ECJ) is to clarify on the basis of submission of the Federal Finance Court (BFH), whether for the small business regulation in cases of the so-called differential taxation is to be based on the trade margin. The order for reference of the BFH of 7 February 2018 XI R 7/16 is of great importance for the taxation of turnover in the sale of second-hand goods.

For small businesses, the tax is not charged under § 19 of the German VAT Act (Umsatzsteuergesetz, UStG) if the turnover plus tax in the previous calendar year did not exceed € 17,500 and is unlikely to exceed € 50,000 in the current calendar year. In the case of a dispute, the sales of a second-hand car dealer subject to differential taxation pursuant to Section 25a UStG amounted to € 27,358 (2009) and € 25,115 (2010) for a sales price calculation.

In contrast, the used vehicle dealer determined the basis of assessment according to § 25a (3) UStG according to the difference between the selling price and the purchase price (trading margin) at € 17,328 and € 17,470. He therefore assumed that he was a small business owner i.S. of § 19 UStG and owe no sales tax. The tax office did not follow the administrative approach, which was changed with effect from 1 January 2010, and failed to apply the small business rules for the year 2010. The total turnover of the plaintiff in the preceding calendar year 2009 exceeded the limit of € 17,500. The Finanzgericht gave the action after unsuccessful appeal.

On the other hand, the BFH, which tends to base its calculation on the respective sales figures on the differences, considers that clarification by the ECJ is necessary. This is based on the fact that the interpretation of Article 288 sentence 1 no. 1 of Council Directive 2006/112 / EC of 28 November 2006 on the common VAT system, to which the national VAT law has to be based on European harmonization , Doubts exist.

If there are doubts as to the interpretation of such directives, the BFH is obliged to submit a preliminary ruling.

Source: Bundesfinanzhof