The Finanzgericht Baden-Württemberg has ruled that the sale of privately acquired items via the internet platform eBay is not subject to VAT. In the case at hand, a self-employed financial services provider had, over a period of 14 months, auctioned off a total of 140 fur coats privately on eBay. Total proceeds amounted to EUR 77,000. Across the entire 14-month period, this averaged 2.5 sales per week. Proceeds ranged from a minimum of EUR 3.50 (sale of a lynx coat) to a maximum of EUR 3,210 (sale of a mink coat). The tax office treated the turnover as taxable; the woman was to pay approximately EUR 15,000 in VAT on it. The fur coats came from the estate of her deceased mother-in-law, that is, from her husband's private holdings. The tax office did not consider the explanation of the diligent eBay seller credible. The lady took the matter to court and prevailed. With its judgment of 18 July 2012 (Az. 14 K 702/10), the Finanzgericht ruled in her favour after having previously examined her husband as a witness regarding the origin of the coats. It was credible that his mother had acquired the furs successively (here over a period of 25 years) and later carefully stored them at home. There was no evidence that the woman herself had purchased the fur coats in order to resell them later. In view of this, the woman had not acted like a dealer on the market in making the sales and had therefore not engaged in an entrepreneurial activity. The tax office could not prove an entrepreneurial activity and had to forgo the VAT. The decision also creates a degree of legal certainty. The Finanzgericht Baden-Württemberg has clarified that a VAT-liable entrepreneurial activity is not established merely by the occasional disposal of private assets in several similar acts exploiting the same opportunity and the same continuing arrangement. This principle is, in principle, also transferable to situations unrelated to the eBay platform.
Current value in dispute for use of a third-party image on eBay: EUR 3,000
In proceedings seeking an injunction against the use of a third party's photograph by a private or small-scale commercial seller on eBay, a value in dispute of EUR 3,000 is appropriate, according to a decision of the Oberlandesgericht Köln. The respondent had, without permission, incorporated into her own eBay listing an image that the applicant had taken of garden pond and fish pond covers. The applicant therefore sought an injunction against the respondent for the unauthorised use of the photograph. The Landgericht Köln set the value in dispute for the proceedings at EUR 6,000. The respondent appealed against this. The Oberlandesgericht Köln ruled in favour of the respondent. It first noted that the use of the internet as a forum for communication and as a marketplace had grown in scope and importance in recent years. This must lead to the weight of an individual infringement being assessed today as comparatively low. Accordingly, taking the economic weight of the infringement into account, a value in dispute of EUR 3,000 was sufficient. The former standard amount of EUR 6,000 was no longer considered appropriate; however, the infringement was by no means to be regarded as insignificant.
Frequently asked questions
Frequently asked questions
Are private eBay sales subject to VAT?
No, the sale of privately acquired items via eBay is generally not subject to VAT. The Finanzgericht Baden-Württemberg (judgment of 18 July 2012, Az. 14 K 702/10) clarified that the occasional disposal of private assets, even through several similar transactions, does not yet constitute a business activity. The decisive factor is whether the seller acts on the market like a commercial trader.
When is an eBay seller classified as an entrepreneur for VAT purposes?
A business activity exists when the seller acts on the market like a trader, for example by deliberately purchasing goods for resale. The number of sales alone or the use of the same platform does not establish entrepreneurial status. Decisive factors are the overall circumstances, such as purchasing behavior, systematic approach, and sustained intent to sell.
Who bears the burden of proof in disputed cases of entrepreneurial status on eBay?
The tax office must prove that an entrepreneurial activity exists. If this proof fails, for example because there is no evidence of purchases made for resale, no VAT can be levied. In the case decided, the sale of 140 fur coats from inherited private property was not sufficient to establish entrepreneurial status.
What amount in dispute applies to unauthorized image use on eBay?
The Higher Regional Court of Cologne has ruled that in injunction proceedings concerning the unauthorized use of a third party's photo by private or small commercial eBay sellers, an amount in dispute of EUR 3,000 is appropriate. The previous standard amount of EUR 6,000 is no longer up to date given the increased importance of the internet as a marketplace. Nevertheless, the legal violation remains significant.
Can the ruling on eBay sales be applied to other sales platforms?
Yes, the principle established by the Tax Court of Baden-Württemberg is not limited to eBay. The occasional sale of private assets through several similar transactions generally does not constitute a VAT-liable business activity, regardless of the distribution channel used.