Latest VAT News
Here, we regularly inform you about new court decisions and other newsworthy developments in VAT matters.
No retroactive waiver of the VAT exemption on the sale of real estate - BNF ruling XI B 60/20
In its decision of 25 January 2022 (unofficially published on 2 June 2022), the German Federal Financial Court (BFH) reaffirmed that the waiver of the VAT exemption must be declared in the notarised real estate purchase contract. There is no second chance.
France builds golden bridge for undeclared distance sales conducted before 1 July 2021
Under the regulations in force until 30 June 2021, companies supplying B2C customers in the EU through distance sales had to register for VAT in the destination country if certain thresholds were exceeded and then pay VAT in that country. Companies often neglected to do this. The French tax authorities are now providing a way to rectify this omission without incurring penalties.
Alert: This opportunity is only for a limited time..
Alert: This opportunity is only for a limited time..
Ancillary services supplementing the hotel accommodation could be taxed at a reduced VAT rate - BFH ruling XI B 2/21
In Germany, services that involve only accommodation are subject to the reduced VAT rate of 7%. By contrast, breakfast, spa, and other supplies offered together with the accommodation have been subject to the standard tax rate until now, and the remuneration must be apportioned accordingly. This could be contrary to EU law. Germany’s Federal Fiscal Court (BFH) therefore granted a suspension of execution in such a case in its decision of 7 March 2022 (XI B 2/21).
Landlords and condominium owners´ associations should not be considered taxpayers for telecommunications services received
In a letter dated 2 May 2022, the German Federal Ministry of Finance (BMF) exempts telecommunications services provided to landlords and condominium owners' associations from the reverse charge procedure. This severely strains the law’s wording.
Timely submission of the EC sales list - BMF circular letter dated 20 May 2022
The EU has tightened the thumbscrews with the introduction of the Quick Fixes 2020: The intra-Community supply of goods is now only VAT-exempt if the supplier correctly reports the turnover in the EC sales list. Since then, the ongoing issue has been what happens if the turnover is not reported on time in the EC sales list. The Federal Ministry of Finance (BMF) is making a course correction here with a circular letter dated 20 May 2022.
Reduced VAT rates - regulatory changes until 31 December 2024 required
On 6 April 2022, the VAT Directive was amended with regard to the reduced VAT rates. One objective is to eliminate old injustices. In addition, the VAT rate is increasingly being viewed as an important tool in climate protection.
Input VAT deduction for future shareholders and pre-incorporation companies - BMF circular letter dated 12 April 2022
After many years, the tax authorities have adopted the ECJ case law in their circular letter of 12 April 2022, according to which future shareholders and pre-incorporation companies can, under certain conditions, claim input VAT deduction for purchases that are transferred to the company. The underlying case law is quite complex. Whether the conditions are met must be carefully examined in each individual case.
Subsidies from the municipality to sports clubs may not be VAT taxable - BFH ruling V R 17/20
In the opinion of the tax authorities, based on previous case law, payments for the assumption of tasks by corporate bodies under public law have always been taxable remuneration for services. However, in a recent ruling (V R 17/20 of 18 November 2021, published on 17 March 2022), the BFH (Germany’s Federal Court of Finance) decided otherwise. This case illustrates the need to carefully examine whether the entrepreneur is really performing a task for the municipality or is acting in its own interest.
Direct claims in case of wrongly paid VAT - BMF circular letter dated 12 April 2022
If the recipient of a supply pays German VAT to the supplier even though no VAT is due in Germany, the customer must generally reclaim the VAT from the supplier. In 2007, however, the ECJ had already ruled in its "Reemtsma" judgement that the customer may have to be granted the right to have the VAT refunded directly by the tax office. In a letter dated 12 April 2022, Germany’s Federal Ministry of Finance (BMF) formulated criteria for such a direct claim and arguments for excluding it, using this judgement as a basis.