Liability of On-Line Platforms for Third-Party Sales Tax

On 1/8/2018, the federal government announced in a press conference that there were plans for a significant legal revision of on-line trading (quote from the press officer):

"In future, the federal government will reinforce efforts to combat sales tax fraud in on-line trading. As a result, this will implement a covenant made in the coalition agreement. We will not tolerate traders operating on on-line trading platforms and avoiding paying sales tax. In particular, this applies to traders who are based abroad and are not within easy reach of the tax authorities. Therefore, we want to increasingly hold the operators of electronic trading platforms accountable and protect honest companies against competitive disadvantages. To this end, today, the federal cabinet adopted the resolution that operators of on-line trading platforms will have to provide certain data regarding companies operating on them, and that, under certain conditions, they will also be liable for sales tax not paid by traders."

Therefore, we have to expect a law specifying recording requirements under which third parties will be required to provide information to the internet platform (e.g. communication of the tax number). So far, however, it is unclear whether these data can be used effectively by the fiscal administration: For example, enforcement in Asian countries is not very likely to be successful.

Note by the LHP tax lawyers: Third-party providers will have to fulfil their cooperation obligations since, otherwise, they will seldom have the possibility to participate in trading on internet platforms as sellers. The liability risk is significantly too high and potentially painful. Once the draft bill is available, we will know more.