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The grand coalition has agreed on an economic stimulus package to cushion the economic consequences of the Corona crisis. As part of this package, VAT rates are to be reduced from 19% to 16% and from 7% to 5% for six months from 1 July. In addition, the due date for import VAT is to be extended by 10 days. The VAT rate cut is perhaps primarily just an economic stimulus package for tax advisors. There may now be a purchase premium for everything and not just for cars. However, the administrative burden, especially the necessary changes in IT systems for this short period will, for most companies, be considerable. In times of “short-time work” (Kurzarbeit) and vacation season, the implementation will certainly also present itself as a significant challenge. It will also be interesting to observe whether the legislative procedure, an administrative circular that is to be hoped for and the change of forms and systems on the side of the administration, can be realised in the short amount of time available.
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Fixed establishments and their requirements are a constant source of questions referred to the ECJ. In practice, it is often not easy to determine whether a fixed establishment exists. The ECJ has previously dealt with the issue of whether a subsidiary can also constitute a fixed establishment of its foreign parent company (C-260/95 - DFDS, C-318/111 - Daimler AG). In the current Dong Yang case (C-547/18), the ECJ was required to concern itself with this question once again.
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By means of the Corona Tax Subsidy Act, the legislator intends to relieve the restaurant industry and the public sector from the burden of VAT. To this end, the reduced VAT rate of 7 % is to be applied to the supply of restaurant and catering services provided in the period from 1 July 2020 to 30 June 2021. The transitional period in accordance with sec. 27 para. 22 of the German VAT Act for legal entities under public law as regards the application of sec. 2b of the German VAT Act will be extended by a further two years until 31 December 2022.
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