What is the extent of the direct and immediate link, which must exist between an input supply and a taxed output supply, in order for a taxpayer to be entitled to input VAT deduction from the input supply? The German Federal Fiscal Court had the opportunity to comment on this question - following on from the ECJ’s case law in Iberdrola and Sveda. However, it decided to flip the matter over Luxembourg and - in addition to two further questions - refer the question regarding the link to the ECJ (Ref.: XI R 28/17). Even if the Federal Fiscal Court has not committed itself, this referral can be seen as a positive sign that it may, in the future, be prepared to broaden the concept of what it considers to be a direct and immediate link. This opens up new sources of input VAT for taxpayers – especially in the case of infrastructure construction works.
PORTUGAL obliges to register in central register of beneficial owners and extends deadline for application of certified invoicing software +++ HUNGARY allows input VAT deduction before registration +++ CHILE stops introduction of digital tax +++ GREECE plans real-time reporting of invoices +++ AUSTRIA plans tax on digital advertising revenues and postpones introduction of margin scheme on B2B travel services +++ POLAND publishes new draft law on split payment and postpones introduction of new SAF-T +++ SLOVAKIA reduces VAT rate for accommodation services
After criticism from the associations, the Federal Ministry of Finance has, by the publication of its letter of 18.06.2019, once again, amended section 8.1 of the German VAT Circular as regards the zero-rating of the supply of goods and services for sea-going vessels and aircrafts. The question as to whether the vehicle already exists and whether the zero-rating applies will no longer be a question of launching the vehicle, but of acceptance by the customer. The Federal Ministry of Finance had only introduced the launching date as the decisive date for the existence of a sea-going vessel into the German VAT Circular in its letter of 05.09.2018.
In Germany, the activities of members of supervisory boards are generally subject to VAT. In its judgement in the Dutch case IO of 13.06.2019 (C-420/18), the ECJ decided otherwise. In this case, the ECJ denied the independence of a member of the supervisory board of a foundation. The ECJ ruled that a supervisory board member does not act in his own name, on his own account or on his own responsibility and is subordinate to the supervisory board itself. The individual member does not bear any economic risk associated with his activity. The individual powers of the members of German supervisory boards of stock corporations and cooperatives are already limited by law to a similar extent as referred to in the ECJ proceedings. The decision is therefore likely to result in the alteration of the taxation of German supervisory boards in terms of non-taxability. If the activity of the supervisory board member is not taxable, there is no right for VAT deduction. For the past, the clear guidelines of the German VAT circular should protect legitimate expectations. This is particularly important with regard to the deduction of the input VAT arising from purchases.
The so-called Quick Fixes will come into force on 01.01.2020 and will lead to some changes of the VAT laws in the EU member states. There are a number of questions in doubt in this regard. The EU Commission therefore considers it necessary to publish guidelines in order to ensure uniform application within the EU. It has now published initial thoughts on the subject and asked the Member States for further comments.
France has asked the European Commission's VAT Committee for an opinion on the VAT treatment of recharging electric vehicles (so-called "e-charging"). The VAT Committee will give its opinion on whether e-charging constitutes a single supply and whether it is to be qualified as a supply of services or as a supply of electricity and also whether the ECJ jurisprudence in Auto Lease Holland and Vega International could be applicable to supplies made by EMPs. Once the opinion of the VAT Committee is published, conclusions could also be drawn as to how the supplies of entrepreneurs with a comparable business, such as fuel card issuers, are to be treated from a VAT perspective.
In its letter of 27.05.2019, the Federal Ministry of Finance comments on the VAT treatment of prize money and restricts the scope of the application of the principles established by the ECJ in the Baštová case. It is necessary to make a clear distinction between placement-dependent and placement-independent prize money. Hence, participants in such competitions are required to make a split of the prize money in future.
On 15 May 2019, the European Court of Justice published a ruling in the case of Vega International. This case is likely to, once again, create considerable uncertainty regarding the VAT treatment of fuel supplies carried out using fuel cards. The uncertainty arising from the ECJ ruling in the case Auto Lease Holland in 2003 has thus been revived. The ECJ has reclassified the supplies and now regards this form of transaction as a granting of credit instead of a supply of goods. Not only oil companies, fuel card issuers and their customers, such as logistics and leasing companies, are affected. Companies active in the loading of electric vehicles and in other comparable business models must now also consider what this new ECJ judgement means for them.
Warnings issued pursuant to copyright law are subject to VAT. This was decided by the Federal Fiscal Court in its decision of 13.02.2019 - XI R 1/17. The Court found that a warning given by a copyright holder to an infringer constitutes a taxable supply. In the Federal Fiscal Court’s view, a supply exists in the fact that the warning party gives the warned party the opportunity to avoid a legal dispute. The amount of reimbursement paid by the warned party is the remuneration for the supply. The decision raises follow-up questions. It is also important for other areas of intellectual property, e.g. trademark law.
According to the German tax courts, swimming lessons have, at least to date, undoubtedly fallen within the scope of the Union law VAT exemption as constituting part of “school and university tuition”. The ECJ, however, recently restricted the VAT exemption for the commercial supply of tuition services by defining the term “tuition” much more narrowly. This case law has now led to the Federal Fiscal Court raising doubts and referring three questions to the ECJ. The referral shows that the VAT exemption for the supply of commercial tuition services can currently not be determined with any significant degree of legal certainty.
