Latest VAT News - Forvis Mazars

Conclusions from a 2019 ECJ ruling on event admission entitlement to taxable persons - BMF circular letter dated 9 June 2021

In a letter dated 9 June 2021, the BMF amends the administrative guidelines for the German VAT Code on event services to taxable persons pursuant to Sec. 3a Subsec. 3 No. 5 of the German VAT Code. For these services to be taxable at the event location according to this special regulation, they now no longer have to be accessible to the general public. In doing so, the BMF intends to implement the ECJ ruling in the "Srf konsulterna AB" case of 13 March 2019 (C-647/17). It also clarifies that online seminars are not covered by Sec. 3a Subsec. 3 No. 5 of the German VAT Code.

Apartment rental with parking space is generally VAT exempt overall - BFH-ruling V R 41/19

In its ruling of 10 December 2020 (V R 41/19), unofficially published on 10 June 2021, the BFH (German Federal Court of Finance) ruled that if the landlord of apartments also rents out car parking spaces located in the same building complex, this is an ancillary service to the apartment rental and thus exempt from VAT. In doing so, it rejected the contrary view of the Thuringian Fiscal Court, which had unsettled the real estate industry in 2019. The Thuringia Fiscal Court wanted to interpret the term "building complex" more narrowly and attach further conditions to the uniform service.

Real estate without personnel equipment is not a permanent establishment - ECJ-ruling "Titanium Ltd" (C-931/19)

In its judgement of 3 June 2021 (C-931/19) in the "Titanium Ltd" case, the ECJ (European Court of Justice) ruled that a rented property is not a permanent establishment for the application of the reverse charge procedure if the owner of the property does not have its own staff for the performance of services in connection with the rental. This contradicts the previous practice of the German tax authorities.

Partnerships as integrated companies - ECJ-ruling "M-GmbH" (C-868/19)

The fact that partnerships generally qualify as integrated companies of a VAT group under Section 2 (2) No. 2 of the German VAT Code is no longer in dispute since the ECJ (European Court of Justice) ruling in the Larentia + Minerva and Marenave cases. However, the two VAT senates of the BFH (Germany’s Federal Court of Finance) have so far disagreed on whether this applies unconditionally. This dispute has now been decided by the ECJ in the"M-GmbH"-case (C-931/19)

Distance sales and B2C supplies of services - changes in the law as from 1 July 2021

If your company operates cross-border in the B2C (business to consumer) sector, there is a high probability that VAT reporting obligations will arise in other EU Member States as of 1 July 2021 due to the implementation of the eCommerce Directive. Are you affected?

Germany’s federal government puts application for VAT grouping on the agenda - package of measures to reduce bureaucracy

The German government plans to introduce 22 measures to reduce bureaucracy. Following the federal and state working group’s completion of the preliminary work, a process will be introduced according to which a VAT group does, if possible, not come into force without an application and a conformation from the tax authorities that the legal criteria are met.

Strict stance on input VAT deduction in tax evasion cases - ECJ-ruling "HR" (C-108/20)

The fact that the deduction of input VAT can be denied if the taxable person is involved in tax evasion is not new. However, in its decision of 14 April 2021 (C-108/20 involving the "HR" case), the ECJ (European Court of Justice) once again emphasizes that a mere "should have known" with regard to tax evasion is sufficient at a preliminary stage. This ruling means that taxable persons have considerable due diligence obligations.

Article 3 of the Third Coronavirus Tax Relief Act – lower VAT rate for restaurant services has been extended

The German parliament, with the consent of the Federal Council, has passed the 3rd Act on the Implementation of Tax Relief Measures to combat the effects of the COVID-19 crisis (Third Coronavirus Tax Relief Act dated 10 March 2021). Article 3 extends the measures that apply a reduced VAT rate of seven per cent to restaurant and catering services (excluding the supply of beverages) from the 30 June 2021 deadline until 31 December 2022.

Reverse charge mechanism even if only one of several service recipients is an VAT taxable person - BFH-ruling V R 7/20

In its judgement dated 10 December 2020 (V R 7/20) and published on 20 May 2021, the BFH (Germany’s Federal Finance Court) decided that the reverse charge mechanism also applies if only one of several recipients of the same service is a VAT taxable person. The challenge in this particular case was first to determine who was the actual beneficiary: two individual people or a company. The case illustrates the importance of preparing a well-structured contract.

Webinar- Untangling the EU VAT e-commerce package: prepare your strategy now

10 June | 16:00 – 18:00 CET

The e-commerce sector has been growing rapidly in the last few years, entirely changing the way business is transacted. This growth comes with new rules and regulations, including the new VAT rules for online cross-border sales of goods and services. Set to come into effect on 1 July 2021, these new rules have the purpose of strengthening the European internal market and ensure fair competition with non-European trader