German non resident VAT establishment ECJ ruling

26 October 2011

The European Court of Justice (ECJ) has clarified the rules defining what is a non-resident trader for German VAT purposes.

Austrian non-resident trader charging zero VAT

The ruling, Finanzamt Deggendorf v Markus Stoppelkamp, was issued on 6 October 2011.  It concerned a German trader who moved his VAT tax residency from Germany to Austria.  He then provided his supplies, consulting by his staff on transport services to German-based companies, from Austria under a newly issued local VAT number.  This meant he was treated as a non-resident German VAT trader, involving a transfer of his 'economic seat'. As such, he did not charge any VAT - instead relying on the reverse charge mechanism to zero-rate the supplies.

ECJ Ruling

On 6 October 2011 the European Court of Justice ruled that in order for a person to be considered a ‘taxable person who is not established within the territory of the country’, it is sufficient that the taxable person has established the seat of his economic activity outside that country.

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