The ECJ has made an important decision on VAT exemption for cost-sharing groups. This decision confirms that the Federal Ministry of Finance has taken a far too restrictive view on this issue. The ‘cost-sharing group’ is a particularly interesting option for cooperations whose members are not entitled to deduct input VAT.

Since 1 January 2026, the People’s Republic of China has, for the first time, been applying a comprehensive VAT Law. This codification establishes a coherent legal framework aligned with international standards. Companies should reassess their supply chains, business relationships and VAT structures involving China. The new requirements under the VAT Law may necessitate adjustments or offer opportunities for restructuring.

After almost ten years, the Federal Ministry of Finance (BMF) has finally addressed, in a letter dated 20 January 2026, the question of what happens when a permanently loss-making activity is offered on the market. In the case of a very low-cost recovery ratio, the BMF assumes that the status as taxable person is to be denied and thus the input VAT deduction is to be refused. However, the taxable person can refute this assumption in individual cases. Practitioners should be aware, however, that while the ‘hobby principles’ apply to income tax, different rules apply to determining status as a taxable person for VAT purposes.