The German Federal Ministry of Finance’s current letter implements the most recent judgment on the leasing of operating equipment and abandons the obligatory splitting requirement (sec. 4 no. 12 sentence 2 of the German VAT Act). As a result, the VAT treatment of immovable properties with operating equipment fundamentally changes. Our Newsletter highlights the main consequences for existing contracts and future arrangements and explains why urgent action is necessary.

The General Court held that good faith protection, in the context of the margin scheme (reliance on information provided by the supplier), must be taken into account in the tax assessment procedure and not only in a separate equitable relief procedure. The German practice of referring taxable persons to a separate equitable relief procedure is contrary to the EU principle of effectiveness. The significance of the judgment is likely to extend beyond the margin scheme and may also affect other areas in which German VAT law does not expressly provide for good faith protection. Such cases would include the deduction of input VAT, Reemtsma-type direct refund claims, export supplies and liabilities of unduly charged VAT.

Implementing the domestic e-invoicing mandate will be one of the key priorities until the end of the year. The first transitional arrangement expires on 31 December 2026, while many practical questions remain unresolved. In some respects, the requirements of the CEN standard have proved to be a rather rigid framework. On 15 October 2026, the Federal Ministry of Finance therefore published a further letter addressing pressing outstanding issues. Our newsletter summarises the key takeaways.