Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
Customary designation in invoices - BMF circular letter dated 1 December 2021
In its letter dated 1 December 2021, the Federal Ministry of Finance (Bundesministerium für Finanzen, BMF) adopts the case-law of the Federal Fiscal Court (Bundesfinanzhof, BFH) on the customary designation of the supply in the invoice in the VAT Application Decree (Umsatzsteueranwendungerlass, UStAE). Accordingly, designations that are customary under the circumstances of the individual case, e.g., at the relevant trade level and in the relevant price segment, may be sufficient for deducting the input VAT. However, proving that a designation is customary is difficult and can cause conflicts in discussions with the tax offices.
In response to the ECJ ruling in the "Vega International" case, the German Federal Ministry of Finance (BMF) prepared a draft circular letter on the subject of fuel cards and submitted it to industry associations for comment. The new regulations were to take effect as early as 1 January 2022. However, this circular letter will not be published for the time being.
Update: Equity measures pursuant to the flood disaster - BMF circular letter dated 28 October 2021
The German Federal Ministry of Finance (BMF) is extending the equity measures it implemented in response to the challenges posed by the flood disaster in July 2021. The BMF will continue to provide VAT relief to entrepreneurs helping those harmed by the flooding.
Instalment payments: the entrepreneur must pre-finance the VAT - ECJ ruling "X-Beteiligungsgesellschaft mbH" (C-324/20)
If the parties agree to pay in instalments for a one-off supply that is not a continuous supply, the supplier must pay the VAT in full when the supply is performed. The supplier also cannot rely on a reduction of the taxable basis. This was decided by the ECJ on 28 October 2021 (C-324/20) following a referral by the German Federal Fiscal Court (BFH).
Revocation of the waiver of VAT exemption on the sale of real estate - BFH ruling XI R 22/19
In its decision of 2 July 2021 (XI R 22/19), published on 28 October 2021, the German Federal Fiscal Court (BFH) ruled that the revocation of the waiver of the VAT exemption on the sale of real estate does not have to be notarized. It is possible as long as the tax assessment can still be contested with an appeal or is still subject to review.
VAT assessment for the dependent member of a VAT group can have a third-party effect for the head of the VAT group - BFH V R 13/20
In its ruling of 26 August 2021, published on 7 October 2021 (V R 13/20), the German Federal Fiscal Court (Bundesfinanzhof, BFH) made ample use of the German General Fiscal Code and clarified that, within a VAT group, the head and the dependent members of the group cannot refer differently to new or old jurisdiction.
Drastic changes in the VAT treatment of fuel cards - draft BMF circular letter
In response to the ECJ ruling, the BMF is sending industry associations a draft of a circular letter on the subject of fuel cards. The previous practice of treating fuel card transactions as chain supplies of fuel will now become the exception. Issuers of fuel cards will be required to switch to VAT-exempt financial services as early as 1 January 2022.
No input VAT deduction without an invoice, but a faulty invoice may be sufficient - ECJ "Wilo Salmson France SAS" (C-80/20)
ECJ confirms in its judgement of 21 October 2021 (C-80/20) in the "Wilo Salmson France SAS" case: input VAT cannot be deducted unless there is an invoice. The input VAT deduction must be made for the taxation period in which the invoice was available. For this purpose, it must contain the essential attributes of an invoice, although other attributes can be added later with retroactive effect. If an invoice, once issued and containing the essential attributes, is unilaterally cancelled and reissued, the taxation period for which the invoice was first issued nevertheless remains the correct period for the input VAT deduction.
Hinweispflichten im Vorsteuervergütungsverfahren - EuGH-Urteil "CHEP Equipment Pooling NV" (C-396/20)
Erkennt der Mitgliedstaat der Erstattung einen Fehler in einem Vorsteuervergütungsantrag, so gebieten es der Grundsatz der Neutralität der Mehrwertsteuer sowie der Grundsatz der guten Verwaltung, den Unternehmer darauf hinzuweisen. Berichtigt der Unternehmer daraufhin seinen Antrag, so gilt die Antragsfrist als gewahrt. Dies entschied der EuGH mit Urteil vom 21. Oktober 2021 (C-396/20) in der Rechtssache „CHEP Equipment Pooling NV“.
Allocation decision for mixed-use capital goods - ECJ ruling "E" and "Z" (C-45/20 und C-46/20)
In 2019, the German Federal Fiscal Court (Bundesfinanzhof, BFH) had referred two cases to the ECJ for a preliminary ruling concerning the exercise of the option to allocate an item to the business and thus to claim the input VAT deduction to that extent. Until now, German law required the allocation decision to be reported to the tax office before the normal deadline for submitting the VAT return. The BFH had doubts as to whether this conformed with EU law. The ECJ confirmed the basic admissibility of a time limit but left it to the BFH to decide whether the length of the specific time limit was commensurate.
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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