Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
Only one VAT rate for a uniform supply - ECJ judgement "Finanzamt X" (C-516/21)
VAT law includes a splitting requirement for certain combinations of supplies. Thus, the leasing of permanently installed equipment and machinery does not enjoy the same VAT-exempt status as the leasing of the property even if the equipment/machinery is an essential component of the property. Upon referral by the BFH, the ECJ addressed the question of whether different VAT rates must be applied even if these constitute an ancillary supply to the principal supply of letting a building.
BMF presents draft for the changeover to mandatory e-invoicing as of 2025
After the EU Commission presented a draft for an amended VAT Directive on 8 December 2022 within the framework of the project "VAT in the Digital Age" (ViDA), which is intended to digitalise the invoicing and reporting obligations, the BMF is following suit. A draft for discussion on the new e-invoicing has been presented to the various stakeholders.
§ 14c- VAT in the case of negative VAT statement / Use of supplementary information - BMF circular letter dated 18 April 2023
Because every invoice showing VAT bears the risk of input VAT deduction, VAT is owed solely because of the statement in the invoice. However, there are always situations in which the design of the invoice or the overall circumstances could lead someone to the conclusion that the recipient might believe that he/she is entitled to deduct input VAT. After the Federal Fiscal Court (Bundesfinanzhof, BFH) ruled on a case concerning the statement of negative VAT amounts and the inclusion of supplementary documents, the Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) implemented this ruling in the administrative guidelines to the German VAT Code (UStAE) but modified the BFH's statements.
Status as taxable person in loss-making activities – ECJ judgements "Gmina O." and "Gmina L." (C-612/21 and C-616/21)
In the "Gemeente Borsele" case, the ECJ had already ruled that purely symbolic charges with very little cost recovery were not a remuneration, but rather a type of administrative fee. Thus, there is also no right to deduct input VAT.
VAT grouping: BFH refers internal supplies to the ECJ again and changes jurisdiction on voting rights
After the ECJ had ruled on the two ECJ cases "Finanzamt T" and "Norddeutsche Diakonie", experts breathed a sigh of relief because they no longer had to fear that the ECJ might reject the German concept of VAT grouping altogether. However, the ECJ did not confirm the non-taxability of internal supplies as clearly as they had wished. The V. Senate of the BFH (Federal Financial Court in Germany) is therefore referring the "Finanzamt T" case to the ECJ for a second time. The XI. Senate, on the other hand, is publishing its follow-up decision in the "Norddeutsche Diakonie" case and adapting to the ECJ case law.
No VAT-taxable supply when the costs serve one's own interests – BFH decision XI R 12/20
Companies with great market power, in particular, occasionally pass on a certain portion of their own costs to their suppliers when purchasing goods. This raises the question of whether they thereby provide a supply to their suppliers, which must be invoiced accordingly. In its current ruling, the BFH (Federal Fiscal Court in Germany) shows that this depends on whether the costs of the supply are in the initial supplier's own interest. Whether this is the case depends on the facts of the individual case.
Platform Tax Transparency Act (PStTG) and DAC-7 Directive – Significance for VAT
Digital platforms on which entrepreneurs from all over the world can process their sales have become significantly more important. This poses a real challenge for the tax authorities, and a considerable portion of this turnover is probably not being taxed at the moment. This is also because there are still problems in the way the tax authorities of different EU Member States share information. The EU has addressed this issue with the DAC-7 Directive, which was implemented in Germany via the Platform Tax Transparency Act (PStTG), which came into force on 1 January 2023. In a letter dated 2 February 2023, the German Federal Ministry of Finance (BMF) commented on some issues needing clarification. Here, we shed some light on how these relate to VAT obligations.
Forschungseinrichtungen – Finanzverwaltung positioniert sich zum Umfang des Unternehmens und des Vorsteuerabzugs
16.02.2023. Bisher war es regelmäßig wesentlicher Diskussionspunkt im Rahmen von Betriebsprüfungen und der Erstellung von Steuerklärungen, inwieweit Forschungseinrichtungen umsatzsteuerliche Unternehmer und damit auch zum Vorsteuerabzug berechtigt sind.
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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