How does real estate wholesale work

Exclusiveempty bottle

Cent sums become millions. According to Capital research, the taxpayer incurs losses of up to 40 million euros annually through an absurd regulation in the deposit system. In Berlin, clans have now discovered the gap in the system and professionalized the returnable bottle business. This mainly concerns one-way returnable bottles.

And it works like this: Anyone who buys water in a disposable bottle in retail pays a deposit of 25 cents. He gets it back when he returns the bottle. VAT is not due here. In wholesaling, however, VAT is also charged on the deposit, it is 30 cents here. That's how the law regulates it. Anyone who now buys in retail and sells in wholesalers makes 5 cents profit. By law, dealers are obliged to accept all one-way returnable bottles. No matter where it was bought. This does not cause any damage to wholesalers, because VAT is offset against the tax authorities. In the end, it is the taxpayer who finances the bottle collector's scam.

Individuals also take advantage of Gap

Anyone who runs the model on a large scale makes huge profits. In Berlin, a clan has already specialized in collecting empties from kiosks, pubs and restaurants - and pays the owners the usual deposit in retail. Because that's where they usually buy because the discounter is often the cheapest market. However, the empties are returned to wholesalers.

"70 to 80 percent of all one-way bottles taken back now come from the retail trade," a Metro employee from Berlin told Capital. Sometimes empties come with up to 5,000 bottles. And that several times a day. The proportion should even increase, because more and more brands such as Coca-Cola are increasingly relying on single-use bottles. And not only clans like in Berlin get rich from the value added tax. Anyone who has a wholesale ID card - traders, self-employed and freelancers - can exchange their empties in wholesalers. And so more and more individuals are using the trick.

Returnable bottles for EUR 18 billion in circulation

The Federal Ministry of Finance does not see itself responsible for the tax waste. “The matter is due to the DPG deposit system and the underlying civil law agreements.” This means that it is not due to sales tax law.

The Deutsche Pfandsystem GmbH, or DPG for short, was not aware of the principle, said managing director Verena Böttcher. However, she admitted that the system outlined works - and is indeed at the expense of the taxpayer. When it was introduced in 2003, “the time was very short” and the “political pressure was great”. The structures are very complicated and the potential for rip-offs and fraud is enormous, she says. Because returnable bottles with a value of 16 to 18 billion euros circulated in Germany. According to calculations by 'Capital', the damage to the tax authorities is likely to amount to up to 40 million euros per year. “That's not even all,” said a Metro employee. Because the principle works even with empty returnable bottles.

Read the full story about tax waste on returnable bottles in the latest issue of Capital.

Here you can download the iPad edition of the new Capital. Click here to go to the subscription shop if you want to order the print edition.