Since 1 January 2022, the following applies due to updates to the VAT system directive:

Transport from Germany to third countries is only exempt from VAT within the framework of a business relationship between the consignor and the first carrier or the shipper and the third party.

ECJ case

A shipper placed an order with a forwarder to transport goods from Latvia to Belarus. The forwarder instructed a subcontractor to transport the goods. The subcontractor had neither a licence to provide transport services nor its own vehicle, so used a vehicle leased from the forwarding company for the transport. The subcontractor invoiced its services to the forwarding company without VAT.

The local tax authorities demanded payment of VAT from the subcontractor after a tax audit and the subcontractor took legal action against the claim. Legal action was dismissed in two instances, but the subcontractor filed a further appeal. The case was referred to the ECJ.

The ECJ determined that the invoicing without VAT was incorrect. Without a proper licence, the subcontractor could not carry out any transport services and, therefore, could not apply for an exemption from VAT. The ECJ also stated that tax exemption is an exception, and exceptions must be interpreted narrowly. It follows from the term “direct connection” that only the first (main) carrier can apply a VAT exemption. The subcontractor had no direct contractual relationship with the seller. Therefore, it was not directly connected to the seller and could not apply the VAT exemption (anymore).

Between 2017 and 2022

At first, the German Ministry for Finance completely ignored the ECJ ruling. There was no reaction for roughly two-and-a-half years.

Eventually, the Ministry decided not to apply the ECJ ruling to open cases, if the transport was performed before 1 July 2020. This deadline was first changed to 1 January 2021 and later to 1 January 2022.


The risk for German carriers, as well as German shippers, has increased significantly. It is expected that the tax authorities will start VAT audits over the course of the next year that will focus on cross-border-transactions from Germany to third-party countries. Additional payment claims from service providers are possible; however, the applicable deadlines have to be observed.