Latest VAT News
Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
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.
BMF (Federal Ministry of Finance) circulates draft letter on e-invoicing on 13 June 2024
On 1 January 2025, e-invoicing will become mandatory in Germany for certain supplies provided by taxable persons based in Germany (although transitional rules are available to help suppliers). The Federal Ministry of Finance summarises the key legal regulations and provides some practical provisions to supplement the law. Here we summarise the key points for you.
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).
Allocation decision for input VAT deduction - BMF circular letter dated 17 May 2024
If a taxable person purchases a uniform asset and uses it at least 10 % for business purposes, there is the option of allocating the asset to the business sphere and claiming input VAT accordingly. While the tax authorities previously required that the tax office always be notified of this decision by the end of the statutory tax return deadline, the ECJ and BFH (German Federal Fiscal Court) have decided otherwise. The BMF (German Federal Ministry of Finance) is now aligning itself with the ECJ and BFH rulings.
BFH acknowledges chain supply in the case of fractional transport - BFH decision XI R 1/20 dated 22 November 2023
A chain supply requires the goods to be transported directly from the first supplier to the last buyer - as stipulated in § 3 (6a) UStG (German VAT Code). If two or more parties are involved in the transport, the tax authorities assume that this is not a chain supply. However, the XI Senate has taken a different view.
Draft of the JStG (Annual Tax Act) 2024 - changes to VAT
An unpublished draft bill dated 27 March 2024 for the Annual Tax Act 2024 has been circulating recently. The key VAT-related changes are summarised below (non-exhaustive list). There may be additional changes during the legislative process.
Definition of single-purpose vouchers - ECJ ruling of 18 April 2024, C-68/23
Since 1 January 2019, vouchers are handled the same throughout the EU, and how a voucher is treated depends on whether it is a single-purpose or multi-purpose voucher. In the case of chain transactions involving vouchers, the question arose as to the impact of uncertainties regarding the taxation of upstream transfers. The ECJ answered this question following a referral from the BFH (German Federal Fiscal Court).
Advocate General also proposes the commission model for e-mobility providers – opinion of 25 April 2024, C-60/23
The VAT Committee's guidelines on fuel cards from 6 September 2023 surprised with the creative proposal to treat the fuel card business as a commission transaction. For the e-mobility business, however, the VAT Committee issued a (non-binding) guideline that states that the transaction should be classified as a chain supply of electricity from the charging point operator to the e-mobility provider and from the latter to the customer. The Advocate General, on the other hand, proposes that the commission model should be applied here as well.
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 XI R 21/23 from 18 October 2023 and XI R 33/21 from 6 December 2023
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.