EU: VAT obligations of digital platforms pre-2015 (CJEU referral)

Referral from the German Federal Tax Court (BFH)

Referral from the German Federal Tax Court (BFH)

The Court of Justice of the European Union (CJEU) on 7 February 2024 published a referral from the German Federal Tax Court (Bundesfinanzhof—BFH), Case Finanzamt Hamburg-Altona C-101/24. The request pertains to the value added tax (VAT) obligations of digital platforms prior to the introduction of the VAT rules for electronic services and digital platforms from 1 January 2015.


Effective 1 January 2015, the sale of digital services to final consumers within the EU is taxable where the consumer is located, regardless of the location of the seller. In addition, for sales of digital services facilitated by intermediaries such as digital platforms, the EU rules create a deemed buy sell operation performed by the intermediary (i.e., for VAT purposes, the intermediary is deemed to purchase the digital services from the seller and resell it to the final consumer).

Prior to 2015, the EU VAT rules pertaining to digital services were slightly different as the sourcing rules differed based on the location of the seller: (1) where the consumer is located for sales made by non-EU sellers, and (2) where the seller is located for sales made by EU sellers. In addition, the EU VAT rules did not include specific rules for sales made by digital intermediaries.


The German-based taxpayer develops and sells game apps for mobile devices. The taxpayer uses an app store, operated by an Irish-based company, X, for distribution. The taxpayer and X have a standardized agreement that the developer is the seller of the products offered via the app store. X displays the products in the name of the developers, makes them available for download and purchase by end customers, and receives a commission for this.

The dispute arose over the VAT treatment of in-app purchases made from 2012 to 2014 (i.e., before the digital services rules and digital intermediation rules were introduced). The taxpayer initially saw themself as the service provider to the end customers (B2C) and declared German VAT for sales made to these end customers that are resident in the EU.  

However, they later changed their view, believing that they provided their services to X, and X provided the services to the end consumers arguing that X acted as an undisclosed agent and was therefore performing a deemed buy sell under the standard VAT rules applicable to undisclosed agents. As a result, the taxpayer, applying the business-to-business (B2B) sourcing rules for services, considered the digital services as taxable (sourced) where the recipient is located (i.e., in Ireland), leading to a reduction in the VAT taxable transactions in Germany. X itself considered that the software developers selling through the app store were liable for VAT and included a statement in the receipt sent to consumers that the amounts include German VAT. As a result of the different positions taken by the taxpayer and X, no VAT was remitted to the tax authorities.

The German tax authorities, however, view X only as a disclosed agent providing a service to the German developer. They argue that the transactions were carried out for a third party, and X was only collecting the claim. Thus, they argue the taxpayer should be liable for German VAT. The tax authorities issued VAT notices for the tax periods 2012 to 2014, in which the changes declared by the plaintiff were not taken into account.

The lower tax court ruled in favor of the plaintiff, stating that X acted as an undisclosed agent (i.e., acting in its own name in the in-app purchases) as the average end consumer would have assumed that the purchase was made in the app store, not from the plaintiff. The tax authorities have appealed this decision to the BFH. 

Questions referred to the CJEU

The BFH has referred the following questions to the CJEU for a preliminary ruling:

  1. In circumstances when a German taxpayer (developer) has, before 1 January 2015, provided a digital service to end customers resident in the EU via an app store of an Irish taxpayer, are the general undisclosed agent principles (Article 28 of the EU VAT Directive) to be applied, with the result that the Irish taxpayer is treated as if it had received these services from the developer and provided them to the end customers, because the app store only named the developer as the service provider in the order confirmations issued to the end customers and showed German VAT?
  2. If the answer to the first question is in the affirmative: Is the fictitious service provided by the developer to the app store, in accordance with Article 28 of the EU VAT Directive, sourced where the business customer is located (i.e., Ireland), or is it sourced to Germany where the underlying (B2C sale of digital services is taxable?
  3. If, following the answers to questions 1 and 2, the developer has not provided services in Germany: Does the developer have a tax liability for German VAT in accordance with Article 203 of the EU VAT Directive, because the app store, in accordance with the agreement, named it as the service provider in its order confirmations sent by email to the end customers and showed German VAT, although the end customers are not entitled to recover their VAT expenses?

KPMG observation

Depending on the outcome and analysis provided by the CJEU, the case could provide significant insights into the VAT treatment of digital services sales pre-2015. For instance, if the CJEU follows the German tax authorities approach, this would lead to non-EU sellers having VAT liabilities even if their sales were facilitated by digital intermediaries. Moreover, the case could shed some light onto the liability of platforms for sales of non-digital services, which currently are not in scope of the explicit deeming provision for digital services facilitates by intermediaries. For more information, read a February 2024 report prepared by the KPMG member firm in Germany

For more information, contact a KPMG tax professional:

Philippe Stephanny |

Christoph Jünger |

Kathrin Feil |



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