Latest VAT News
Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
Council members agree on ViDA directive on 5 November 2024
14 November 2024
Almost two years have passed since the European Commission presented the first draft of the ViDA directive (VAT in the Digital Age) on 8 December 2022. Since then, there have been lively discussions. On 5 November 2024, the Council of the EU finally reached an agreement on the compromise proposal of 30 October 2024. We summarise the most important points here.
Input VAT deduction for provided machinery: ECJ ruling C-475/23
7 November 2024
The following describes the expenses for the provision of machines that are entitled to input VAT deduction in relation to the ECJ ruling ‘Voestalpine Giesserei Linz GmbH’ of 4 October 2024, C-475/23. A right to deduct input VAT only exists if the expenses have a direct and immediate link to taxed output transactions or to general expenses. The ECJ has now addressed the question of whether input VAT can be deducted from the purchase of goods that are provided to another trader for the provision of a service.
BMF announces its administrative opinion on the new e-invoicing regulations, which will take effect on 1.1.25
Supply of electricity can entitle the landlord to deduct input VAT - BFH ruling XI R 8/21 of 17 July 2024
The tax authorities generally regard the supply of electricity by the landlord to the tenant as an ancillary supply to the letting. If the letting is VAT exempt, there is no right to deduct input VAT. Although the ECJ distinguished between two groups of cases in its judgement in the Wojskowa Agencja Mieszkaniowa w Warszawie (WAM) case in 2015 on the issue of ancillary supply/independent main supply, the tax authorities have so far been unimpressed by this. The BFH now had the opportunity to take a position on "WAM" and at the same time to differentiate between electricity and heat supplies.
No clear line for travel services – ECJ ruling on Dragoram Tour, C-763/23, from 25/06/2024
Services provided by travel agencies and tour operators are subject to margin taxation, regulated in § 25 of the German VAT Code and Art. 306 et seq. of the VAT Directive (Tour Operators Margin Taxation – TOMS). Even after the ECJ clarified that this covers B2B as well as B2C constellations, the scope of application remains unclear. The ECJ rulings appear contradictory, particularly with regard to the question of whether a travel service must consist of a bundle of services.
Triangular transactions without transfer of the VAT liability finally fail: BFH ruling XI R 35/22 of 17 July 2024
Most people know that an invoice for an intra-Community triangular transaction must contain a corresponding note. What is often overlooked is that the tax liability must also be explicitly transferred to the customer. If the information is missing from the invoice, this cannot be corrected, i.e. there is definitely no triangular transaction. This has now been confirmed by the BFH (German Federal Fiscal Court).
No direct claim if the tax office has already refunded the VAT – ECJ C-83/23 of 5 September, H GmbH
Since the ECJ's "Reemtsma" ruling, it has been clear that a recipient of supplies may be entitled to a direct claim against the tax office if they have wrongly paid VAT to the supplier and it is impossible or excessively difficult to obtain a refund from the supplier. The BFH (German Federal Fiscal Court) has referred a case with some special features to the ECJ. The decision is to the disadvantage of the recipient of the supply.
VAT rate for ancillary supplies to accommodation services: BFH submissions to ECJ, published on 13 June 2024
After the recent ECJ ruling on two cases regarding the split of uniform supplies for VAT purposes, the BFH (Federal Fiscal Court in Germany) is unsure how this will affect the allocation requirement of § 12 (2) no. 11 sentence 2 UStG (German VAT Code) for accommodation services with dependent ancillary supplies. It is therefore referring three cases to the ECJ for a preliminary ruling, namely concerning car parks (XI R 11/23), breakfast (XI R 13/23) and, among other things, fitness facilities and Wi-Fi (XI R 14/23).
Internal supplies in a VAT group are out of the scope of VAT: ECJ ruling C-184/23 of 11 July 2024, "Finanzamt T"
When the BFH submitted the "Finanzamt T" case to the ECJ for the first time in 2020, the Advocate General shocked the German VAT world with her thesis that internal supplies within a VAT group could be subject to VAT. Unfortunately, the ECJ did not clarify this issue as clearly as would have been desirable in its judgement in 2022. The BFH therefore felt compelled to submit the case to the ECJ again, reduced to this question. This time, the answer is clear.
Affiliated company as fixed establishment - ECJ ruling C-533/22 "SC Adient" of 13 June 2024
In 1997, the ECJ opened a Pandora's box with its decision in the DFDS case (C-260/95) by ruling that the equipment of a subsidiary acting as an auxiliary person in the provision of services could constitute a fixed establishment for the parent company. In some countries, the tax authorities subsequently began actively searching for fixed establishments within group structures. In Germany, the judgement was not very well received. The ECJ's judgement in the "SC Adient" case provides companies with a little more legal certainty as the ECJ has further narrowed the definition of what constitutes a fixed establishment.