Industries

To handle VAT correctly, it is important to know the specific supply being provided and what economic benefit it provides to the recipient. In many industries, this can be extremely specific, and an adviser must know and understand the industry well – its objectives and how it works – to be able to determine the correct VAT treatment. We have experience in many very specific industries.

Pharmaceutical

Pharmaceutical manufacturers operate in a legally demanding environment: Agreements with health insurance companies provide manufacturer rebates and pharmacies sometimes receive subsidies for advertising costs. Between affiliated companies, there are commission transactions and the settlement of market licences. If the sales price of the pharmacies changes, there may be a stock value loss. Other relevant topics include:

Benefits/invitations to medical practitioners
Free seminars / colloquia
Apparatus collectives
VAT-exempt supplies of medical practitioners (medical service centre status)

Contact person: Thomas Pelzer

Hospitality & Leisure

Events

Foreign organisers planning an event in Germany often face unexpected VAT challenges. Although there is a simplification rule that dictates that event performances are taxed uniformly at the event’s location, its scope clearly indicates a conflict between this rule, the special rule for event services performed to non-taxable persons and the general rules on the place of supply. It’s a smart idea to seek VAT advice at a very early stage in the planning. This allows you to collect important VAT-relevant information such as status as a VAT taxable person, etc. from the attendees at an early stage in the registration process. The following questions often arise:

Are membership fees subject to VAT?
Is a sponsorship considered a subsidy or taxable?
What is the status of the accompanying spouses who are invited?
Are catered meals and/or gala dinners considered an ancillary service?

Contact person: Thomas Pelzer

Travel

The tourism industry presents a kaleidoscope of VAT issues due to margin taxation. Tour operators are faced with particular challenges such as the fact that sec. 25 (old version) of the UStG (Germany’s VAT Code) infringes on EU law with regard to restrictions on B2C. Other challenges they face:

Defining what constitutes a travel purchase supply

Calculating the margin
VAT-exempt travel services carried out in a third country
Bookkeeping obligations

Your contact: Birgit Jürgensmann

Banking

Banks focus on two issues: The VAT-exempt nature of their services and the related optimisation of the input VAT key. Other unique issues facing this industry are:

Classification of individual financial services (swaps, futures, derivatives, non-performing loans, agency services, etc.)
Safekeeping and administrative services (e.g., for securities) are not exempt from tax
Input VAT key (method to determine the percentage of deductible VAT for banks, interest margin, third country recipients)
Opting out of the VAT exemption

Your contact: Dr. Anja Wischermann

Insurance

Optimising the input VAT rate is an important issue for insurance companies, just as it is for banks. Potentially non-tax-exempt supplies such as claims settlement and underwriting agency can also affect this. There are also, for example, these unique aspects:

VAT tax point differs from the date of the tax reporting for insurance tax purposes
Insurance services as permanent services, the correct allocation of prepayments, additional payments, and surcharges for deferred payments
Opting out of the VAT exemption for rental agreements for the insurance company

Your contact: Dr. Anja Wischermann

Real Estate

Certain services involving real estate are tax-free – and for some, you can opt for taxation. This raises the issue of the input VAT rate. If conditions change, input VAT corrections are required, which means that documentation relevant to sec. 15a (definition of correctable investments, beginning of the correction, calculation) must be maintained and updated. Be sure that the contract includes the appropriate VAT clause before signing it. If an owner's community exists, there are special challenges. Fixtures added by lessees are often a cause of tension and building cost/fixture subsidies are often paid for large commercial projects. The following additional issues are often important here:

Classification of primary and ancillary supplies
Applicability of reverse charge for construction services
Distinction between supplies related to real estate and supplies subject to the general rules on the place of supply (B2B or B2C)

Your contact: Dr. Anja Wischermann

Automotive

The simple fact that numerous suppliers are involved in the production of a vehicle means that many questions relating to VAT arise – a classic example is tooling. Increasing e-mobility and digitisation are presenting new challenges for the sector these days, e.g., supplying power to electric vehicles or services related to the "connected car". Leasing and financing contracts have the VAT characteristics typical of financial services. The following topics also relate specifically to VAT:

Full-service packages
(Extended) warranties, damages
Rebates, discounts, and subsidised interest rates
Loyalty campaigns or other sales promotions
Deliveries of new vehicles to private individuals
abroad

Your contact: Birgit Jürgensmann

Transport & Logistics

The logistics industry is always on the move, transporting goods worldwide. From a VAT perspective, complex cross-border transport services are often provided. Many of these issues also relate to customs legislation, for example, the invoicing of import handling, customs procedure 4200, and the authorised economic operator (AEO). Interesting in terms of VAT are also sales occurring in free harbours or the use of consignment warehouses. With regard to container leasing, important issues are where the container is located and who the customer is.

These issues are also common:

Fiscal representation
Import one stop shop (iOSS)
Transit procedure

Your contact: Birgit Jürgensmann