The German Ministry of Finance implements Federal Fiscal Court case law with respect to the waiver of VAT exemptions, as well as the withdrawal thereof. Accordingly, in the future, the waiver and its withdrawal are still permissible up to the substantive enforceability. However, this does not apply to the supply of immovable property outside of a foreclosure procedure. In the future, a taxable person can only opt for VAT liability when a notarial sales contract is concluded.
GREECE extends local Reverse Charge mechanism +++ INDIA implemented new VAT system +++ ITALY shortens period for claiming input VAT and extends split-payment-system +++ POLAND intends to implement split-payment-system and extends SAF-T reporting obligations +++ ROMANIA introduces data-base for high risk businesses +++ RUSSIA intends to increase standard VAT rate by 4 percentage points +++ SWITZERLAND considers global turnover to be decisive for the liability to pay VAT +++ HUNGARY implement obligation to electronically transfer invoice details after a preliminary test phase and publishes “Blacklist”.
Once again, the ECJ has had to decide on how to ascribe the transport of goods in a chain transaction. The ECJ maintains the principles of its case law in its judgment of 26 July 2017 (case Toridas, C-386/16). However, it also sees a decisive criterion in the notification of the resale of the goods, before they leave the country, in order for the transport not to be allocated to the first supply. This will need to be considered in the future.
Based on two decisions of the German Federal Fiscal Court (XI R 25/12 and V R 6/13) regarding cross-border price discounts, the German Ministry of Finance has now completely revised sec. 17.2 of the German VAT Circular. What is pleasing is that the revision provides clarification that a recipient is not obliged to reduce its input VAT if the price reduction is granted by a supplier carrying out a supply of goods from other EU Member States or non-EU countries. However, what is not so pleasing is the extensive obligation to provide proof.
The Federal Supreme Court recently ruled, that tax evasion could be considered as already having been detected, even before the tax office has examined the relevant tax return. Once the tax crime is considered as detected, self-disclosure no longer offers exemption from punishment. This may also apply to VAT: When a VAT return requires correction, it might already be too late for a self-disclosure with the effect of exemption from punishment. The assumption of an intentionally committed tax evasion can be effectively prevented by the implementation of a Tax Compliance Management System.
It is difficult for corporations to establish the organizational integration for a VAT-group. Recently, the V. Senate of the Federal Fiscal Court interpreted this feature very strictly. Now, however, it is the V. Senate which, by judgment of 10 May 2017 – V R 7/16, has stated that an organizational integration is possible even in the absence of personnel interweaving of the executive bodies, if a controlling and profit-and-loss transfer agreement exists.
In the past, the ECJ has often had to decide cases on VAT exempt intra-Community supplies. The most recent decision (decision of 14.06.2017 – legal case C-26/16), demonstrates an important procedural aspect: Where the tax authority has already examined the affected transactions and the existing documentation and did not object, it may not retroactively deny tax exemption due to the principle of legal certainty. This also applies beyond intra-Community supplies.
The German Federal Fiscal Court ruled by judgment of 21 December 2016 – XI R 27/14 on the VAT treatment of competitive warnings. The Federal Fiscal Court assumes a taxable supply from the admonisher to the competitor. From its point of view, the content of the service supplied is the opportunity to avoid a legal dispute. The remuneration for this service is the amount of the reimbursement that the admonisher pays. Entrepreneurs who charge competitors on the basis of the Act Against Unfair Competition will have to pay attention to VAT.
The German Ministry of Finance has now implemented the Federal Court of Justice’s new case law and therefore now allows partnerships to be potential VAT-group members. However, this only applies if 100% shares in the partnership are held by the VAT-group or its subsidiaries. From a practical point of view, it is also pleasing that the German Ministry of Finance is sticking to its generous interpretation of the features of the organizational integration.
The Federal Fiscal Court recently published its first two decisions in principal proceedings regarding the settlement of past property developer cases. In its view, it is admissible to assess VAT against the supplier for the past, when the property developer requests a refund. This, however, requires that the supplier has a claim against the property developer for an additional VAT payment, which he can assign. If this is the case, sec 27 para 19 of the German VAT Act cannot be challenged. Thus, property developers continue to accrue interest on their tax refund claim.