Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
Erneute Verlängerung der Übergangsfrist zu § 2b UStG auf den 1. Januar 2027 geplant
Die Übergangsfrist zur Anwendung von § 2b UStG, der zentralen Umsatzbesteuerungsnorm für juristische Personen des öffentlichen Rechts, soll um weitere zwei Jahre auf den 1. Januar 2027 verlängert werden.
Visitor tax may or may not be subject to VAT: BFH rulings from 06 December 2023, XI R 21/23 and XI R 33/21
In the "Gemeinde A" case, the ECJ ruled on 13 July 2023, following a referral from the BFH (German Federal Fiscal Court), that the municipality’s visitor tax is not subject to VAT if the visitor tax is linked to the stay in the municipality but not to the actual use of the spa facilities, and these facilities are freely accessible to everyone free of charge. The BFH has now ruled on the case referred to the ECJ and distinguished it from another case in which it deemed the visitor tax to be subject to VAT. Here, we provide a brief (not exhaustive) summary of the key statements of the two rulings.
Proof of status as a VAT-taxable person in the reverse charge procedure - BFH ruling V R 20/21 of 31 January 2024
For the VAT liability to be shifted to the recipient of the supply (reverse charge) in the case of services provided by a foreign entrepreneur, the recipient must be a VAT-taxable person. Ideally, the supplier will determine whether this is the case by requesting the VAT ID and checking its validity. Other proof of VAT status is permissible but often involves a certain amount of negotiation with the tax office.
Cost of a new heating system does not entitle the landlord to deduct input VAT: BFH ruling from 7 December 2023, V R 15/21
The costs associated with the installation of a new heating system are not apportionable as operating costs. They can only justify a rent increase if they meet the requirements of an “energy-efficient refurbishment”. If the conditions are not met, the landlord is stuck with the costs. It would help the landlord if at least the input VAT deduction could be claimed for these expenses. In the opinion of the BFH, however, this is not permissible.
Incorrect VAT tax statement in invoices to final consumers – BMF letter dated 27 February 2024
In its judgement of 8 December 2022 (C-378/21), the ECJ ruled that VAT incorrectly stated on an invoice is not due if there is no risk of loss of tax revenue because the service was provided exclusively to final consumers. The contrary BFH (German Federal Fiscal Court) ruling from 13 December 2018 (V R 4/18) is therefore obsolete. The BMF (German Federal Ministry of Finance) recognises this and clarifies the scope of this ECJ ruling.
Input VAT apportionment: BMF letter dated 13 February 2024
The right to deduct input VAT only exists if an input supply is used for a taxed output turnover.
If an input supply cannot be directly and immediately allocated to a specific output turnover, but only to the business activity as a whole, an input VAT ratio must be calculated by comparing the taxed turnover to the total turnover. The Federal Ministry of Finance has issued several clarifications to the administrative guidelines of the German VAT Code (UStAE).
Device bonus for mobile phone contracts - BMF letter dated 23 January 2024
The German tax authorities amended the VAT Application Decree: If a mobile phone company concludes a contract with an intermediary in which it pays the intermediary a commission regardless of whether this intermediary provides a phone to its end customer, this is considered contractual decoupling and the full amount of the commission is then considered the remuneration for the intermediary service.
Supplies made free of charge and input VAT deduction – BMF circular letter dated 24 January 2024
The German Federal Ministry of Finance (BMF) aligns with the case law of the ECJ and the German Federal Fiscal Court (BFH): In certain cases, purchases that are only indirectly related to taxed output transactions are also eligible for an input VAT deduction.
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.
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...
This website uses cookies.
Some of these cookies are necessary, while others help us analyse our traffic, serve advertising and deliver customised experiences for you.
For more information on the cookies we use, please refer to our Privacy Policy.
