Latest VAT News - Forvis Mazars

Consumption on the spot: Company canteen - BFH ruling XI R 2/21

The supply of food and beverages can be considered either a supply of goods or a supply of service. As a supply of goods, it may be subject to the reduced VAT rate, but as a "restaurant service" the standard VAT rate applies.

Time of input VAT deduction in case of payment on accruels - ECJ ruling "Grundstücksgemeinschaft Kollaustraße" (C-9/20)

German VAT law does not explicitly regulate the point in time at which the right to an input VAT deduction arises in the case of input services provided by taxable persons using taxation based on payments received. However, in Section 15.2 (2) of the VAT application decree, the tax authorities have, until now, assumed that the input VAT deduction must be claimed in the VAT return period in which the supply is received, even if the supplier taxes the transaction upon receipt of the payment in accordance with Section 13 (1) no. 1 (b) and Section 20 of the German VAT Code. In its ruling of 10 February 2022 (C-9/20), the ECJ declared it infringes EU law that the recipient must claim the input VAT deduction upon payment if the supplier uses taxation based on payments received.

Advocate General criticises German VAT group - Opinion "Norddeutsche Gesellschaft für Diakonie mbH" and "S" (C-141/20, C-269/20)

On 13 and 27 January 2022, the Advocate General at the European Court of Justice (ECJ) issued an opinion on two references for a preliminary ruling from the German Federal Fiscal Court (Bundesfinanzhof, BFH). Unsurprisingly, she concluded that German law is contrary to EU law to the extent that it designates the head of a VAT group as the taxable person instead of the VAT group itself. However, the Advocate General's view that transactions within the VAT group are taxable contradicts previous ECJ case law.

Consumption on the spot: Restaurants in shopping malls - BFH Ruling V R 42/20

The supply of food and beverages can be considered either a supply of goods or a supply of service. As a supply of goods, it may be subject to the reduced VAT rate, but as a "restaurant service" the standard VAT rate applies. In the case of a normal restaurant with waiting staff and a tablecloth, the distinction is obvious – but what about today’s many fast-food alternatives? The BFH (Bundesfinanzhof = Germany’s Federal Fiscal Court) dealt with the issue of a food court in a shopping centre in its decision dated 26 August 2021, published on 2 December 2021 (V R 42/20).

Suspension of the expiry of the tax assessment period against the supplier in property development cases - BFH ruling V R 37/10

Since the Federal Fiscal Court (Bundesfinanzhof, BFH) limited the application of the reverse charge procedure to construction services (V R 37/10, 22 August 2013) following an ECJ referral, recipients (especially property developers) have been claiming back the VAT paid – and the tax offices have been trying to collect it retrospectively from the construction service providers. Two BFH rulings of 27 July 2021, published in December 2021, Ref. V R 3/20 and V R 27/20, show that the General Fiscal Code has complex stumbling stones here.

Usefulness and profitability of expenses for the deduction of input VAT - EuGH-Urteil "Amper Metal Kft." (C-334/20)

In order for input VAT to be deductible, the purchased services must be directly and immediately related to an output transaction giving rise to an input VAT deduction or, as general expenses, to the overall economic activity. Hungarian authorities wanted to deny the input VAT deduction because the expenses were useless and overpriced. The ECJ (C-334/20, 25 November 2021) rejects this in principle - but there seems to be a certain limit.

VAT reliefs in connection with Corona extended - BMF circular letter dated 7 and 14 December 2021

In a letter dated 9 April 2020, the BMF (Federal Ministry of Finance, Bundesfinanzministerium) had already ordered various VAT relief measures in connection with the Corona crisis, which were extended and expanded until 31 December 2021 in a letter dated 18 December 2020. On 14 December 2021, the BMF again extended the VAT reliefs until 31 December 2022. In a letter dated 7 December 2021, the deferral of payment and other procedural simplifications were also extended. The regulations are summarized here in key words. Further conditions may have to be observed.

Call-off stocks: BMF circular letter dated 10 December 2021

After almost two years, the BMF (Federal Ministry of Finance, Bundesfinanzministerium), in a circular letter dated 10 December 2021, finally commits itself in some areas to the handling of the call-off stock regulation, which has been in force since 1 January 2020, and amends the VAT Application Decree in large parts. Among other things, the relationship of Section 6b German VAT Code to the BFH (Federal Fiscal Court, Bundesfinanzhof) case law from 2016 is clarified. The possibility of voluntarily applying the call-off stock regulation is surprising. We summarize the most important provisions of the BMF circular letter for you.

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.

Update: Draft of a circular letter on fuel cards

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.