Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
Variable board remuneration is also not automatically taxable: ECJ ruling "TP" of 21 December 2023, C-288/22
On 13 June 2019, the ECJ ruled in the "IO" case (C-420/18) that the activities of a supervisory board member did not constitute self-employment and were therefore not subject to VAT because the board member did not bear any entrepreneurial risk. The Federal Ministry of Finance subsequently amended its application decree to the effect that fixed remuneration is not taxable, but variable remuneration is. According to the current ECJ judgement "TP", this is no longer tenable in such a generalised way.
Restaurant visits and catering will become expensive again as the reduced VAT rate expires on 31 December 2023
Lockdowns during the COVID-19 pandemic placed a heavy burden on the restaurant and catering businesses. To support the industry, a reduced VAT rate of 7% on restaurant and catering services (excluding beverages) was introduced on 1 July 2020 and extended several times. "I agreed to this in the knowledge that we will never abolish it again," said Federal Chancellor Scholz in 2021. However, the recent decision by the Federal Constitutional Court has left a shortfall of 60 billion euros in the federal budget, forcing the federal government to save money. As a result, the VAT rate reduction will now expire at the end of 2023.
Subscription gifts as an ancillary supply to a magazine subscription
ECJ judgement "Deco Proteste - Editores Lda" of 5 October 2023 (C-505/22)
Nowadays, magazine subscribers often receive a gift when subscribing, and this gift is often quite valuable. The question here is whether this constitutes a free of charge disposal of goods. If, on the other hand, there is a supply against payment, it must be clarified whether this is considered an independent supply or whether the subscription gift together with the supply of magazines is considered a uniform supply. This has an impact on the VAT rate.
After the ECJ ruling in the "Vega International" case, the BMF (German Federal Ministry of Finance) felt compelled to circulate a draft letter in November 2021, which declared the chain supply of fuel previously common in the industry to be the exception rather than the rule as early as January 2022. When it became known that the VAT Committee of the EU Commission would take up the issue, the BMF withdrew the letter to await the outcome. Since 6 September, the corresponding guidelines of the VAT Committee have been available. These were derived from Working Paper 1067 of 5 July 2023.
Direct claim: ECJ judgement "Michael Schütte" of 7 September 2023, C-453/22
If the recipient of the supply cannot recover unduly paid VAT from the supplier, a direct claim against the tax office may be possible under certain circumstances, based on the ECJ's "Reemtsma" case law. Following a referral by the Münster Regional Tax Court, the ECJ has now dealt with further detailed questions - with a positive result for those affected.
Economic integration in the case of fiscal unity - BFH ruling V R 28/20 of 11 May 2023 (published on 14 September 2023)
The fiscal unity (or VAT group) for VAT purposes is a moving target - especially with regard to the economic integration that this requires. Legal practitioners have to rely on vague legal terms that make a reliable assessment difficult. The BFH (German Federal Fiscal Court) has now added some clarification here.
Decentrally consumed electricity from CHP plants does not constitute a supply and return supply
BFH ruling V R 22/21 of 11 May 2023
In its ruling of 29 November 2022 (XI R 18/21), the XIth Senate of the Federal Fiscal Court (Bundesfinanzhof, BFH) had already decided that the obligation of the grid operator to also pay a surcharge for decentrally consumed electricity in accordance with the Act on the Maintenance, Modernisation and Expansion of Combined Heat and Power Generation (Gesetz für die Erhaltung, Modernisierung und den Ausbau der Kraft-Wärme-Kopplung, KWKG) does not imply a supply and return supply of the electricity. The Vth Senate has now stated that it is in agreement. The contrary view of the tax authorities (section 2.5 paragraph 17 of the UStAE, the VAT Application Decree) can therefore no longer be upheld.
10 June | 16:00 – 18:00 CET
The e-commerce sector has been growing rapidly in the last few years, entirely changing the way business is transacted. This growth comes with new rules and regulations, including the new VAT rules for online cross-border sales of goods and services. Set to come into effect on 1 July 2021, these new rules have the purpose of strengthening the European internal market and...
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