The German Federal Fiscal Court ruled by judgment of 21 December 2016 – XI R 27/14 on the VAT treatment of competitive warnings. The Federal Fiscal Court assumes a taxable supply from the admonisher to the competitor. From its point of view, the content of the service supplied is the opportunity to avoid a legal dispute. The remuneration for this service is the amount of the reimbursement that the admonisher pays. Entrepreneurs who charge competitors on the basis of the Act Against Unfair Competition will have to pay attention to VAT.

The German Ministry of Finance has now implemented the Federal Court of Justice’s new case law and therefore now allows partnerships to be potential VAT-group members. However, this only applies if 100% shares in the partnership are held by the VAT-group or its subsidiaries. From a practical point of view, it is also pleasing that the German Ministry of Finance is sticking to its generous interpretation of the features of the organizational integration.

The Federal Fiscal Court recently published its first two decisions in principal proceedings regarding the settlement of past property developer cases. In its view, it is admissible to assess VAT against the supplier for the past, when the property developer requests a refund. This, however, requires that the supplier has a claim against the property developer for an additional VAT payment, which he can assign. If this is the case, sec 27 para 19 of the German VAT Act cannot be challenged. Thus, property developers continue to accrue interest on their tax refund claim.