VAT reliefs in connection with Corona extended - BMF circular letter dated 7 and 14 December 2021

Free transfers of value concerning medical material or personnel

If entrepreneurs provide personnel or materials to hospitals, medical practices and similar companies free of charge, the VAT taxation of a free transfer of value is waived. Correspondingly, an input VAT deduction is granted as an exception if an entrepreneur already intends to use the purchased service accordingly at the time of purchase.

VAT exemption for the provision of material resources and premises as well as employees

If an entity whose sales are VAT-exempt under § 4 nos. 14, 16, 18, 23 or 25 German VAT Code (e.g. doctors, hospitals, nursing homes, but also others) provides another entity, to which the same VAT exemption applies, with material resources, premises or employees, this provision is also VAT exempt.

Input tax deduction for change of use

In order to cope with the Corona crisis, the public sector occasionally uses its buildings differently than before – e.g. a sports hall is converted into a vaccination center. Such changes in use may result in a VAT being levied on a free transfer of value or an input VAT adjustment having to be made in accordance with Section 15a of the German VAT Code. For reasons of equity, the tax authorities refrain from doing so if and to the extent that the circumstances are based on use to cope with the Corona crisis. Periods in which a building cannot be rented out due to the contact restrictions or similar reasons caused by Corona do ­not lead to a change in use compared to the period before the contact restrictions. The equity rule also applies accordingly to input VAT from current costs and to public-sector companies operated under private legal form, provided that the use is free of charge­.

Deferral of payment in a simplified procedure

Taxpayers who can demonstrate that they have been directly and not insignificantly negatively affected economically may submit applications for interest-free deferral of the taxes due by January 31, 2022, stating their circumstances. The deferrals shall be granted until March 31, 2022 at the latest. Subject to reasonable installment payments, a follow-up deferral may be considered.

Stay of execution

Under the same conditions, enforcement measures shall be waived until March 31, 2022, for taxes due by January 31, 2022. Subject to reasonable installment payments, an extension may be considered.

(Dated: 22 December 2021)