Latest VAT News
Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
VAT assessment for the dependent member of a VAT group can have a third-party effect for the head of the VAT group - BFH V R 13/20
In its ruling of 26 August 2021, published on 7 October 2021 (V R 13/20), the German Federal Fiscal Court (Bundesfinanzhof, BFH) made ample use of the German General Fiscal Code and clarified that, within a VAT group, the head and the dependent members of the group cannot refer differently to new or old jurisdiction.
Drastic changes in the VAT treatment of fuel cards - draft BMF circular letter
In response to the ECJ ruling, the BMF is sending industry associations a draft of a circular letter on the subject of fuel cards. The previous practice of treating fuel card transactions as chain supplies of fuel will now become the exception. Issuers of fuel cards will be required to switch to VAT-exempt financial services as early as 1 January 2022.
No input VAT deduction without an invoice, but a faulty invoice may be sufficient - ECJ "Wilo Salmson France SAS" (C-80/20)
ECJ confirms in its judgement of 21 October 2021 (C-80/20) in the "Wilo Salmson France SAS" case: input VAT cannot be deducted unless there is an invoice. The input VAT deduction must be made for the taxation period in which the invoice was available. For this purpose, it must contain the essential attributes of an invoice, although other attributes can be added later with retroactive effect. If an invoice, once issued and containing the essential attributes, is unilaterally cancelled and reissued, the taxation period for which the invoice was first issued nevertheless remains the correct period for the input VAT deduction.
Hinweispflichten im Vorsteuervergütungsverfahren - EuGH-Urteil "CHEP Equipment Pooling NV" (C-396/20)
Erkennt der Mitgliedstaat der Erstattung einen Fehler in einem Vorsteuervergütungsantrag, so gebieten es der Grundsatz der Neutralität der Mehrwertsteuer sowie der Grundsatz der guten Verwaltung, den Unternehmer darauf hinzuweisen. Berichtigt der Unternehmer daraufhin seinen Antrag, so gilt die Antragsfrist als gewahrt. Dies entschied der EuGH mit Urteil vom 21. Oktober 2021 (C-396/20) in der Rechtssache „CHEP Equipment Pooling NV“.
Allocation decision for mixed-use capital goods - ECJ ruling "E" and "Z" (C-45/20 und C-46/20)
In 2019, the German Federal Fiscal Court (Bundesfinanzhof, BFH) had referred two cases to the ECJ for a preliminary ruling concerning the exercise of the option to allocate an item to the business and thus to claim the input VAT deduction to that extent. Until now, German law required the allocation decision to be reported to the tax office before the normal deadline for submitting the VAT return. The BFH had doubts as to whether this conformed with EU law. The ECJ confirmed the basic admissibility of a time limit but left it to the BFH to decide whether the length of the specific time limit was commensurate.
Reimbursement of expenses for certain written warnings will be subject to VAT - BFH rulings XI R 27/14 and XI R 1/17
On 21 December 2016 (XI R 27/14) and 13 February 2019 (XI R 1/17), the Federal Fiscal Court (BFH) ruled that the reimbursed expenses paid by a person issued a written warning for copyright or competition law infringement is a service charge that is subject to VAT. The BMF also adopted this view in its letter dated 1 October 2021 and clarified some specific questions. The key details are summarised below.
Update: VAT and insurance tax treatment of guarantee commitments - BMF circular lettter dated 18 October 2021
Germany’s Federal Ministry of Finance (BMF) is once again extending the transitional rule for the treatment of paid guarantee commitments as an insurance service in a circular letter dated 18 October 2021. This gives entrepreneurs more time and flexibility to adapt to the amended Federal Fiscal Court (BFH) case law.
Reverse charge procedure for VAT groups as recipients of supplies - BMF circular letter dated 27 September 2022
In its ruling of 23 July 2020 (V R 32/19), the Federal Fiscal Court (Bundesfinanzhof, BFH) issued a decision in a property development case: If the recipient of construction work supply is part of a VAT group, the applicability of the reverse charge procedure is dependent on the external supplies of the VAT group. In a letter dated 27 September 2021, the German Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) subsequently amended the VAT Application Decree (Umsatzsteuer-Anwendungserlass, UStAE) and extended this legal principle beyond property development cases to other areas in which the reverse charge procedure is applied in VAT group cases.
Management fee for venture capital funds has been exempt from VAT since 1 July 2021
The German Fund Location Act extended Sec. 4 no. 8 h of the German VAT Code with effect from 1 July 2021. As a result, the management of venture capital funds is also exempt from VAT. This has significant implications for capital management companies.
Fraud warning: False VAT ID letters in circulation
Germany’s Federal Central Tax Office (BZSt) warns of official-looking letters or emails offering to issue, register, record or publish a VAT ID for a fee.