In the thirteenth and last part of our KMLZ newsletter series on the Annual Tax Act 2020, we present the new regulation of sec. 14 para. 4 sentence 4 of the German VAT Act. According to this regulation, the correction of an invoice for missing or incorrect information does not constitute an event with retroactive effect within the meaning of sec. 175 para. 1 sentence 1 no. 2 of the German General Fiscal Code and sec. 233a para. 2a of the German General Fiscal Code. The retroactive effect of an invoice correction applying to periods of assessment, which have already expired, can thus lead to a permanent loss of input VAT deduction in individual cases. In addition, the regulation also has an impact on interest on late payments and refunds. Unfortunately the new regulation doesn’t go far enough.
In the twelfth part of our newsletter series on the Annual Tax Act 2020 we are examining the amendments of the previously relatively unknown fine provisions in the German VAT Act. Due to the planned changes, the tax authorities are likely to focus more on these regulations in the future. Companies are therefore called upon to review their processes - especially their payment methods – already now.
In the eleventh part of our KMLZ newsletter series on the Annual VAT Act 2020 we comment on the planned changes regarding cross-border price reductions, which the supplier grants, not directly to his customer, but to another recipient in the supply chain. With the implementation of sec. 17 para 1 sentence 6 into the German VAT Act, a legal loophole will be closed. When the Annual VAT Act 2020 comes into effect, it will no longer be possible to reduce the output VAT when the supply to the recipient, who benefits from the price reduction, is VAT exempt.
In the tenth part of our newsletter series on the Annual Tax Act 2020 we focus on the implementation of the reverse charge mechanism on the supply of telecommunication services (= TC supplies), as intended by the legislator. By taking these steps, the legislator intends to curb fraud models. However, the new regulation only applies to TC supplies rendered to a taxable person who himself is a reseller of TC supplies. Companies that buy and/or sell TC supplies must adapt their internal processes and systems accordingly, for both purchases and sales. Meanwhile, a number of unresolved questions and considerable difficulties in application are emerging. The legislator would do well to rework and improve the regulation.
In the ninth part of our KMLZ Newsletter series on the Annual Tax Act 2020 we present the innovations concerning the VAT exemptions for supplies to the armed forces. In its currently valid version, the VAT Act provides for VAT exemptions for supplies rendered to NATO troops in accordance with sec. 4 no. 7 letters a and b of the German VAT Act. In addition, there is also a tax exemption based on the NATO Status of Forces Agreement, which is independent of the VAT Act. A VAT exemption for troops of EU Member States and military EU missions has not previously existed.
In the eighth part of our KMLZ newsletter series on the Annual VAT Act 2020 we comment on the extension of the OSS-procedure applicable for all supply of services to non-taxable persons. In particular we explain the effect of OSS to cross-border passenger transportation services and other changes in this context. The simplification rules, as laid down in sec. 5 of the German VAT Implementation Code, are to be abolished. Consequently, as of 1 January 2021, short distances of up to 10 kilometers travelled in Germany will be subject to German VAT. This will result in an additional administrative burden being placed on providers of cross-border passenger transportation.
This is the 7th part of our Newsletter series on the Annual Tax Act 2020. Today, we will focus on the legislator’s intended implementation of a so-called decentralised taxation procedure for federal and state authorities. The tax authorities already allow individual dependent organisational units of the federal and state governments to be treated as taxable persons. However, a legal basis for this does not yet exist. Such a legal basis is now to be established, so that the individual organisational units may exercise all rights and obligations under VAT law after the option period has expired. This represents a simplification. However, many questions remain open.
The sixth part of our newsletter series on the Annual Tax Act 2020 deals with the changes regarding the healthcare, nursing care and social services sector. The legislator is further aligning the German VAT law in this sector to European law. The draft of the Annual Tax Act 2020 provides for a number of selective extensions of the corresponding VAT exemptions. In particular, the assessment of the 25 % threshold, provided for in the residual provision of sec. 4 no. 16 German VAT Act, is to be adjusted. Furthermore, the legislator wants to clarify, that short-term room rentals by student unions to students are VAT-exempt.
In the fifth part of our newsletter series, we explain the reorganisation of MOSS in the Annual Tax Act 2020. The MOSS procedure will be replaced by the OSS procedure. The requirement that taxable persons using the OSS procedure must do so consistently throughout the EU will probably mean that it will not be applicable for many. The scheme will not benefit those persons using fulfilment solutions.
In the fourth part of our newsletter series, we take a closer look at the implementation of the e-commerce package in the Annual Tax Act 2020. The draft law contains new regulations for distance sellers. A uniform and low threshold now applies to intra-EU distance sales. However, the changes will only make life easier for a certain category of distance sellers. For those with fulfilment center structures, new registration obligations in other EU countries will probably arise.