Under what circumstances does the reduced VAT rate apply to workshops for disabled persons and integration companies? With its decision of 23.07.2019 (ref. XI R 2/17), the Federal Fiscal Court demonstrates its intention to allow only a very restrictive application of the reduced VAT rate. It ignores both how these non-profit organizations work and that the pursuit of social purposes is privileged in accordance with Union law.
The reduced VAT rate of 7% for e-books and comparable electronic products will apply with the publication of the Annual Tax Act 2019 in the Federal Law Gazette, probably before the end of this year. In particular, the provision of books, newspapers and magazines in electronic form will be subject to the sec 12 para 2 no 14 of the German VAT Act. However, subscriptions and memberships could also benefit.
NETHERLANDS assigns new VAT ID number to sole traders +++ AUSTRIA applies ECJ decision Vega only in individual cases +++ CZECH REPUBLIC implements a general Reverse Charge mechanism +++ GREECE plans reduction of VAT rates +++ UK plans to retain Intrastat returns also after Brexit +++ NORWAY simplifies registration for distance sellers +++ CROATIA sets a deadline for obligation to register in the Register of Beneficial Owners +++ AUSTRIA has raised threshold for VAT registration of small entrepreneurs +++ PORTUGAL extends deadline to pay VAT due +++ HUNGARY reduces VAT rate for accommodation services
Last Friday, the German Federal Council approved the Annual Tax Act 2019 (under a different name). It has thus implemented the VAT exemption for medical treatments in private clinics into the German VAT Act. The regulation is applicable as of 01.01.2020. Private clinics should therefore quickly check whether they meet the requirements specified in the new legislation.
The Third Bureaucracy Relief Act recently passed by the German Bundestag and Bundesrat succinctly states: "In sec 19 para 1 sentence 1 of the German VAT Act, the "EUR 17,500" shall be replaced by "EUR 22,000". However, this seemingly small change will have a significant effect on many taxable persons. Even though the amendment will not come into force until 1 January 2020, (small) businesses can already benefit from it in 2019.
According to the new regulatory regime of sec. 2b of the German VAT Act, non-taxable cooperation against payment between legal entities under public law is only possible under very specific conditions of sovereignty. In its letter of 14.11.2019, the Federal Ministry of finance has now further restricted the provision of sec. 2b para. 3 no. 2 of the German VAT Act, with the conclusion: Started out a tiger and ended up a bedside rug.
Do grants and subsidies from a third party form part of the VAT base? The ECJ answered this question in the affirmative in the proceedings C-573/18 and C-574/18. The case concerned the financing of capital goods via an operational fund. The decision shows the means by which the tax authorities attempt to make subsidies or grants de facto subject to taxation.
In May 2019, the ECJ ruling in Vega on fuel card transactions was issued, following on from the earlier ECJ decision in Auto Lease Holland. The fuel card sector previously considered the two judgments to be of little relevance, given that they concerned individual cases. However, Austria is now proving that these decisions have the potential for significant impact. The current draft of the Austrian VAT Guidelines update strikes at the core business of fuel card companies: chain transactions will no longer be possible. Fuel will be regarded as being supplied directly from the petrol station operator to the cardholder. Fuel card issuers will be considered to provide a supply of services, possibly even VAT-exempt credit services. This will also apply to toll transactions. All companies involved in the fuel card business will be affected, possibly from as early as November 2019.
On 10.10.2019 the European Commission decided to initiate formal infringement proceedings against Germany in relation to its new legislation on the liability of online marketplaces. This is based on the new regulations in secs 22f and 25e of the German VAT Act on the liability for online marketplaces which came into force on 1 January 2019. The Commission has requested that Germany act within the next two months, i.e. withdraw the new regulations in secs 22f and 25e of the German VAT Act affecting EU online merchants.
Banks outsource some of their tasks to external service providers. Due to the (at least partial) VAT exemption of their output supplies, it is particularly important for banks that their service providers provide their supplies to the bank VAT-exempt. In the legal case Cardpoint (C-42/18), the ECJ ruled on such an outsourcing case. However, the ECJ assumed that the outsourced supply of service (operation of ATMs) was subject to VAT. Due to the ECJ's strongly case-by-case argumentation, it is not possible to draw too many conclusions for other supplies of services to banks.