More and more online sales include dropshipping. This means that the goods are being sold and delivered to the buyer’s buyer. The following article clarifies the VAT treatment of transactions in which an online seller sells the goods to a buyer in another EU member country but sends it to the buyer’s buyer.
According to Slovenian VAT legislation, a Slovenian taxpayer, who sells goods online to another EU Member State, must first check who he supplies the goods to.
If a Slovenian taxpayer supplies goods to a taxable person from another EU member country, such goods supplies are treated as exempt supply of goods in the EU in accordance with Article 46 of the ZDDV-1 (Law on VAT) and the VAT obligation is transferred to the buyer.
Pursuant to the first paragraph of Article 46 of the ZDDV-1, supplies of goods are exempt from the VAT payment if they are dispatched or transported by the seller or the person acquiring the goods or by another person for their account from the territory of Slovenia to another EU member country, if they are executed to another taxable person or a legal entity, which is not a taxpayer or acts as such in that other EU member country. Therefore, as far as an online seller sells goods to a buyer in another EU member country and then sends these goods to the address of the buyer’s buyer in the same EU member country, such a supply is exempt from the payment of Slovenian VAT in accordance with Article 46 of the ZDDV-1.
In doing so, the Slovenian taxpayer must have proof that the goods left the territory of Slovenia in accordance with Article 78 of the PZDDV-1, which stipulates that the taxpayer wishing to enforce an exemption from VAT payment on the basis of Article 46 of the ZDDV-1, must prove, that these goods are dispatched or transported to another EU member country with an invoice and a transport document or other relevant document, in which it must be clearly indicated that it relates to the carriage of goods from the invoice.
If the buyer picks up the goods in the warehouse of the seller, we suggest to prepare a statement in accordance with Article 79 of the PZDDV-1, which the buyer should sign and it can serve as an appropriate proof that the goods have left the territory of Slovenia.
Pursuant to the second and third paragraphs of the Article 79 of the PZDDV-1, it is considered that, in the case when the goods are dispatched or transported from Slovenia to another EU member country, the person acquiring the goods or another person for his account, the supplier of the goods may, in addition to the invoice and instead of the document, mentioned in the Article 79 of the PZDDV-1, also use a written declaration of the transport of goods to another EU member country, signed by the acquirer of the goods, as proof that the goods were dispatched or transported to another EU member country,.
The declaration of goods carriage, mentioned in the preceding paragraph, must include the following information:
- the name and address of the supplier;
- the number and date of the invoice for the goods supplied;
- the name, address and VAT identification number of the buyer;
- the means of transport with which the goods will be transported, with the number of the traffic permit;
- the destination the other EU member country and
- the indication that the buyer is willing to provide to the Slovenian tax authority additional information regarding the destination of these goods.
Based on the above, we can conclude that an online seller can execute an exempt sale of goods in accordance with Article 46 of the ZDDV-1 even when the goods are sold to a buyer from another EU member country and sent to the buyer’s buyer in an EU member country, in which the buyer is registered for VAT purposes.
Published: Portal FinD-INFO, 17th October 2018, www.findinfo.si, Author: Natalija Kunstek, tax consultant