The Federal Fiscal Court has expressed serious doubts about the lawfulness of the apportionment requirement for supplies of accommodation services. In justification, it refers to the ECJ submission of the V. Senate of the Federal Fiscal Court on the apportionment requirement for operating equipment. The decision on the suspension of execution thus brings fresh impetus to the discussion sparked by the ECJ judgment in the Stadion Amsterdam CV case as to whether the apportionment requirement for accommodation services is in conformity with EU law.
In the previous view of the German tax authorities, the VAT exemption for intra-Community supplies was to be dependent on the relevant EC Sales List being submitted or corrected in due time. Since the time this requirement was included in the German Administrative Circular in 2020, considerable doubt has existed as to whether this extremely strict view was actually acceptable under EU law. For some time now, there have been increasing loud whispers that the Federal Ministry of Finance would ultimately correct this. Now the time has finally come. In its letter of 20 May 2022, the Ministry clarifies that the VAT exemption cannot be denied solely on the basis of a failure to meet the deadline for the ECSL.
In its decision of 21 April 2022, the Federal Fiscal Court abandoned its previous generous case law on supplies in the sports sector. The national VAT exemption rule was classified as basically in conformity with EU law. The ruling also makes it clear that Union law allows the German legislator to exercise a quite generous scope of discretion. However, as long as the legislator does not make use of its possibilities in favour of sports clubs, taxable persons in the sports sector can no longer invoke Union law.
In its letter of 12 April 2022, the Federal Ministry of Finance commented, for the first time, on the ECJ judgment of 15 March 2007, the so-called direct claim (“Reemtsma claim”). Here, under certain conditions, recipients are granted a refund claim against the tax office, similar to input VAT deduction. However, the Federal Ministry of Finance has significantly restricted this claim. Union law is likely to oppose this narrow understanding of the Reemtsma claim.
In its recent ruling on city cards, the ECJ was given its first opportunity to comment on the application of the VAT Directive's voucher regulations, as they are in effect since 1 January 2019. The key question was whether city cards can even be classified as vouchers. While the ECJ went on to find that it is possible for the city card in question to be classified as a voucher, specifically a multi-purpose voucher, it failed to establish any general principles, resulting in the loss of an opportunity to create some degree of legal certainty for the treatment of comparable instruments.
From now on, the German tax authorities will allow shareholders and pre-incorporated companies to deduct input VAT from purchases that subsequently accrue to a company outside of a taxable supply. In its letter of 12 April 2022, the German Federal Ministry of Finance sets out the requirements for the deduction of input VAT and refers to the relevant case law of the ECJ and the German Federal Fiscal Court, that was issued some time ago. According to this, the purchased supply must be transferable to the company and lead to a (planned) investment transaction for the company. In practice, this leads to complex delimitation issues.
On 6 April 2022, the VAT Directive was amended with regard to reduced VAT rates. Germany has thus been given additional flexibility and can now more effectively implement its coalition agreement objectives. The reform is characterised by carrots and sticks. A new scope of discretion is opened up and unpopular issues are being eliminated.
The legal requirements for fixed establishments are an ongoing source of questions for the ECJ. In previous judgments, the ECJ ruled that a subsidiary can constitute a fixed establishment of its parent company. In the legal case Berlin Chemie A. Menarini SRL (C-333/20), the ECJ was, once again, asked to consider the question of whether a taxable person, who uses the human and technical resources of an affiliated company, constitutes a fixed establishment.
In 2014, the German Federal Fiscal Court ruled that private hospitals can provide hospital and medical care exempt from VAT by invoking Union law. Since then, there have been many individual cases of dispute between private hospitals and the tax authorities. The issue is often focused on whether the private hospitals fulfil the Union law requirement of “comparable social conditions”. Now, in its judgment of 7 April 2022 (C-228/20), the ECJ specified criteria, on the basis of which, the assessment is to be carried out.
With its letter of 8 July 2021, the Federal Ministry of Finance published its change of view on the VAT treatment of supervisory board members. According to this, the activity of a supervisory board member is only subject to VAT if at least 10% of the remuneration for this duty is variable. In its most recent letter of 29 March 2022, the Federal Ministry of Finance now clarifies important questions of application: The time of supply has now been redefined. Key points for determining the 10% threshold have been shifted. New non-objection regulations have been provided.
