Latest VAT News - Forvis Mazars

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

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.

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.

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.

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.

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?

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)

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).

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.

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.