In case of cross-border supplies of motor vehicles (cars) attention should be paid to special VAT rules. This does not only concern businesses, but also private individuals.
Selling into EU member states
* Selling “new cars” from Germany into other EU member states is subject to VAT. This is even the case, if the seller is an individual and not a business. The supply of the car is basically tax exempt (zero rated intra-Community supply of goods). In contrast to the standard VAT scheme the tax exemption is not limited to B2B-situations.
* This special VAT scheme only applies, if “new cars” get supplied. The term “new car” involves all motorised land vehicles
- with engine displacements exceeding 48 cc or power exceeding 7,2 kilowatts and
- which are supplied within less than six months after the date of first use or which were used for less than 6.000 kilometers.
* Also cars which are primarily used for sports or leisure purposes are covered by these special VAT rules. This has been expressively decided by German fiscal courts for so called pocket bikes (BFH, decision dated 27.2.2014 - V R 21/11).
* The seller should comply with special VAT documentation duties. Otherwise, the tax authorities could refuse the tax exemption:
The transport into the EU-member state of destination can e.g. be documented by an entry certificate or proper freight documents. It is important that the documents show the vehicle identification number.
In case the car is supplied to an individual, the German tax authorities request for additional evidence. This evidence can be provided with documents showing the vehicle registration or the taxation on intra-Community acquisition in the EU member state of destination (even if it’s not clear, whether this is in line with the case law of the European Court of Justice).
In case the purchaser picks up the car and does the transport into the EU member state of destination, the vehicle registration – if required - in the EU member state of destination should be documented in any case.
* Corresponding to the zero rated supply in Germany the buyer should declare in most cases intra-community acquisitions in the EU member state of destination. Differing from the standard VAT scheme this is also the case, if an individual buys the car. As a result, local VAT is charged on the purchase. Of course, a business buying the car for the purpose of its taxable business activities can deduct the VAT on the intra-Community acquisitions in its VAT reports, however, e private individual cannot (VAT on final consumption).
Individuals should check the reporting obligations and deadlines in the EU country of destination. This should be done in a short term in order to avoid fines or penalties on belated filing of returns.
Selling into non EU member states
* A business (e.g. car dealer) selling a car into a non EU member state basically carries out a supply which is basically VAT exempt (zero rated export). This applies in B2B as well as B2C situations. Moreover, it does not matter whether a new or a used car is supplied. However, the export should be well documented. In most cases the transport into the non EU member state can be proved by an certificate of export (Ausgangsvermerk) or by an alternative certificate of export (Alternativ-Ausgangsvermerk). These documents are electronically submitted by the customs authorities to the exporter or his customs agent.
* When exporting “new cars” additional proof is required. In case the export concerns cars which are subject to vehicle registration, the custom certificates (Ausgangsvermerk; Alternativ-Ausgangsvermerk) should also show the vehicles identification number. This is also the case if the car is transported by truck or ship.
Additionally, the export must be demonstrated by certificates proving the vehicle registration, the customs clearance or the import taxation in the non EU member state. Although the German tax authorities do not consistently ask for this kind of evidence it is strongly advised to keep it at hand as it is a statutory part of the required documentation.
However, in the following constellations there is no need of the before mentioned additional evidence:
- The car is supplied under an export license (Ausfuhrkennzeichen). The export license can be requested from the local vehicle licensing authority.
- The car is supplied by truck or ship and is not put into operation for traffic on public roads (in terms of Vehicle Registration Law).