Destination principle

The country of destination principle is a principle for the collection of sales tax for goods and services for export and import. The principle states that the goods or services when exported and crossed borders are exempt from sales tax in the country of origin (country of origin) and are charged with the local sales tax in the importing country (country of destination).

Ziel des Bestimmungslandprinzips ist es, Doppelbesteuerungen und Wettbewerbsverzerrungen bei internationalem Handel zu vermeiden. Um den europäischen Binnenmarkt zu vollenden und grenzüberschreitenden Handel zu steigern, bemüht sich die EU um eine Umstellung des Bestimmungslandprinzip auf das Country of origin principle. Demnach wäre bei Import von Gütern grundsätzlich die Umsatzsteuer des Ursprungslandes zu entrichten. Da sich die EU-Mitgliedstaaten jedoch darauf bisher nicht einigen konnten, findet weiterhin das Bestimmungslandprinzip Anwendung.

Further explanation:

The country of destination principle is a principle of sales taxation (VAT) for cross-border services. According to this, in contrast to the country of origin principle, deliveries of goods are exempt from VAT when exported in the country of origin and are charged with import sales tax in the importing country according to local regulations. This principle follows the excise tax concept and guarantees competition neutrality, since all goods, regardless of whether they are imported or not, are subject to the same sales taxation.

see also: country of origin principle