Following the German Federal Fiscal Court’s decision, liability according to sec 25d para 1 German VAT Act is subject to significant obstacles. The recipient can be held liable for VAT for supplies on a previous stage in the supply chain only in exceptional circumstances. It is not enough that the acquirer is aware that the supplier is under criminal investigation. Evidence proving that the acquirer knew of the supplier’s intention not to pay VAT for the specific revenues when contracting is a precondition for the VAT liability of the acquirer.
In its decision of 15.11.2017 in the legal cases Geissel and Butin – C-374/16 and C-375/16, the ECJ held that the address, where the issuer of an invoice carries out its economic activity, does not have to be specified in the invoice for the purpose of input VAT deduction. In the ECJ’s view, it is sufficient that the postal address used in the invoices is an address at which the supplier is contactable. This is a clear rejection by the ECJ of the rather narrow German point of view. The decision is also important as regards the recipient’s address.
With its decision of 30.08.2017 – XI R 37/14, concerning a poker player, the Federal Fiscal Court confirmed that a taxable supply requires a direct link between the supply and the remuneration. Where the provision of a payment is uncertain, the direct link might be found to be lacking. This Federal Fiscal Court decision follows the ECJ, which previously similarly decided a case concerning horse racing. In addition to many forms of racing and gaming, other sectors might also benefit from this case law.
The German Federal Ministry of Finance has expanded the zero-rating for these sectors with regard to supplies at earlier stages of the commercial chain. However, the final use must (1) already be determined at the time of supply and (2) within the scope of the zero-rating. This situation will create significant work for the companies concerned, given that compliance by the end of the year is necessary due to the fact that the zero-rating is mandatory and the non-objection regulation only applies until 31.12.2017.
POLAND plans to publish list of active taxable persons and postpones introduction of the split-payment-system +++ ROMANIA postpones introduction of the split-payment-system +++ SWITZERLAND lowers VAT rates +++ HUNGARY is being criticized by the EU Commission for its rules on the EKAER system +++ GERMANY is being criticized by the European Commission for its implementation of the VAT refund procedure
The ECJ continues to soften the right to deduct VAT as seen in the legal case Iberdrola (C-132/16). This decision reignites the discussion about the question of the VAT treatment of development costs. The German Federal Fiscal Court’s case law and administrative opinion are, once again, on trial. Moreover, the decision may also be of general importance concerning VAT deduction.
In 2016, the Federal Fiscal Court had to decide, for the very first time, two cases concerning how supplies via consignment stocks are to be treated. The German Ministry of Finance has now taken on these decisions in the VAT Circular. The undifferentiated view of the Frankfurt Regional Tax Office’s Circular is now a thing of the past. Companies, be they suppliers or customers, who have not already become active after the publication of the Court’s decisions, should now examine whether their supplies, made via consignment stocks or other warehouses, are being handled correctly. This is relevant to all supplies from other EU member states as well as from non-EU countries and even for domestic supplies in Germany. Amendments can be made in a transitional phase until 31 December 2017.
The time has come: The EU Commission has given the go-ahead to implement the final VAT system. This is the beginning of a transition phase in which various changes are to come into force between 2018 and 2022. As a first step, EU-wide regulations for chain transactions and consignment stocks are on the agenda. With respect to intra-Community supplies, the VAT-ID no. shall become a material requirement for the VAT exemption and a uniform framework for documentary evidence shall be defined. The status of the certified taxpayer is to be introduced as a central element. Only companies having this status will be able to benefit from comprehensive simplification rules. As the coming months will bring fundamental changes, companies should start dealing with them now by drawing up a road map.
When the Union Customs Code entered into force, the customs authority started requesting the provision of the tax IDs of employees, executives and supervisory board members when reassessing existing authorizations and applications for the granting of new authorizations. Many companies, however, subsequently expressed doubts as regards the lawfulness of these requests. The Tax Court in Düsseldorf has referred this question to the ECJ. In the meantime, the customs authority has amended its questionnaire for the reassessment of and applications for authorizations.
In its judgments in legal cases C-616/15, C-326/15 and C-605/15, the ECJ ruled that Germany had violated the Union law on VAT exemption of cost sharing associations. According to national law, only associations in the form of so-called technology sharing groups of healthcare professionals are exempt pursuant to sec. 4 no. 14 letter d German VAT Act, and concern members belonging to the medical profession. However, according to the ECJ, all non-profit-making activities must benefit from the VAT exemption. The hopes of banks and insurance companies being in a position to also benefit have now effectively been shattered.