A limited partnership in Germany operated a website which enabled users to view images and videos for a fee. On accessing the partnership’s website, the user was redirected to the website of a Spanish company and then forwarded to the website of a German company (GmbH) where the images and videos were available. The Spanish company provided a special telephone number and a web dial-in platform through which users accessed the content supplied by the German company, with the charges appearing on their telephone bill. The charges, less a commission, were passed on to the German partnership.
The partnership argued that it had not supplied any services to the users, on the basis that providing a website which invited users to visit another site, or redirected users to another site, did not amount to supplying a service to those users. However, the tax authorities believed that the supplies should be subject to VAT as the place of supply was in Germany.
The BFH equates a website operator with a retailer selling goods in their own store. Just as the proprietor of a store is ordinarily deemed to be a trader selling goods on their own account, a website operator should also be treated as the supplier of the goods or services available for sale on that site. It is only possible to conclude that the website operator is acting as intermediary, where the website user can clearly see that the operator is dealing in the name of and for the account of a third party and agrees to this arrangement, either prior to or at the time of concluding the transaction.
Accordingly, the BFH held that the partnership was the supplier and confirmed the tax authorities’ viewpoint. In particular, there was nothing on the partnership’s website to indicate that users were redirected to another website.
The ruling shows that where goods and services are offered for sale on the internet, the information provided on the websites must be sufficiently clear to enable users to identify the party with whom they are contracting. Unless they do this, operators who merely intended to act as an intermediary to a business transaction risk being identified as the supplier.