Latest VAT News
Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
Expansion of municipal roads - BFH-ruling "Mitteldeutsche Hartsteinindustrie" (XI R 26/29)
In its judgement of 16 December 2020 (XI R 26/20) in the "Mitteldeutsche Hartstein-Industrie" case, Germany’s Federal Court of Finance (Bundesfinanzhof, BFH) ruled that services performed in association with the unremunerated expansion of a public road by an entrepreneur entitle the entrepreneur to take input VAT deductions insofar as these are necessary for the company’s operation and that the benefit to the general public is, at most, incidental. A VAT-taxable free of charge supply does not exist if there is no threat of an untaxed end use. The BFH thus amends its case law, which previously denied the input VAT deduction.
No reverse charge for the mere supply of goods assembled on-site - BMF circular letter dated 1 October 2020
Under German VAT law, there are two types of supplies involving the provision of goods with installation, and each has its own VAT regulations. One type of supply involves the provision of assembled goods and the other involves the provision of work supplies. These differences are, in reality, often overlooked.The BMF (Germany’s Federal Ministry of Finance) has clarified this important distinction in the administrative guidelines with a circular letter dated 1 October 2020. As of 1 January 2021, treating supplies of assembled goods as work supplies is no longer be tolerated.
Verlängerung der Verjährungsfrist für Steuerhinterziehung - Gesetzesänderung zum 1. Januar 2021
Der Gesetzgeber hat zum 1. Januar 2021 die Verjährungsfrist für Steuerstraftaten in besonders schweren Fällen von zehn auf fünfzehn Jahre verlängert. Bei strafbefreienden Selbstanzeigen und Nacherklärungen, die strafbefreiende Wirkung entfalten sollen, verlängert sich dadurch der Berichtigungszeitraum. Die Änderung hat mittelbar auch Auswirkungen auf die steuerliche Festsetzungsverjährung.
Taxation of travel services according to Sec. 25 German VAT Code - BMF circular letter dated 29 March 2021
According to a circular letter from Germany’s Federal Ministry of Finance (BMF), dated 29 March 2021, the special provision of Section 25 of the German VAT Code will no longer apply to travel services provided by companies having their registered office in a third country and without a permanent establishment in the EU as of 1 January 2022. This decision is surprising because it has no basis in the wording of Section 25 of the German VAT Code.
Provision of company cars for private use - ECJ-ruling "QM" (C-288/19)
In its judgement in the "QM"-case dated 20 January 2021 (C-288/19), the ECJ has rejected the previous VAT taxation of the provision of cars to employees for personal use, insofar as the employee does not have to pay for the personal use. This opens up new options in cross-border cases.
Appropriate key for input VAT apportionment of mixed-use buildings - BFH ruling XI R 7/20
The BFH (Germany’s Federal Court of Finance) gives priority to the object-related turnover key when determining the input tax apportionment for mixed-use buildings (ruling dated 11 November 2020, XI R 7/20).
Taxable exchange of supplies between the headquarters and a permanent establishment - ECJ-ruling "Danske Bank" (C-812/19)
In its ruling in the "Skandia America" case, the ECJ (European Court of Justice) had already postulated that a taxable exchange of supplies between the headquarters and a permanent establishment was possible in VAT group cases - which contradicts the German understanding of this matter. The ECJ reaffirmed this view in the "Danske Bank" case (C-812/19)