In fact, the case concerning in-app purchases appeared to have been settled by the ECJ’s preliminary ruling in the Xyrality case. However, the Federal Fiscal Court (BFH) has now not ruled out the possibility that the app developer is liable for VAT, as the app store issued order confirmations in the developer’s name, and has referred the case back to the fiscal court for further clarification of the facts. So then, it is clear that the final word on this matter has not yet been spoken.

Recently, the Federal Ministry of Finance issued a draft bill for an Annual Tax Act 2026. From a VAT perspective, the proposed new rules on VAT grouping are of particular interest. A new sec. 2c is to be introduced in the German VAT Act, providing that partnerships may qualify as controlled companies within a VAT group. More importantly, the submission of a declaration on the existence of a VAT group will become an additional requirement for VAT grouping. To this end, the German VAT Implementing Regulation is to be amended, too. In cases of an incorrect declaration of a VAT group, sec. 2c provides for new procedural rules, as well as a specific liability provision.

The German government plans to increase VAT rates as from 1 January 2027. The formula is “21–10–0”, which simply means that the standard VAT rate is set to rise to 21% and the reduced VAT rate to 10%. In order to ensure that the VAT increase does not disproportionately affect low-income households, there are also plans to apply the zero VAT rate to foodstuffs.