Input VAT deduction from advance payments is part of a taxable person’s daily business. Where the supply does not take place, input VAT deduction can only be denied if the payer, at the time of the payment on account, knew or reasonably should have known that the supply was uncertain (judgement of 31.05.2018, C-660/16 and C-661/16, Kollroß und Wirtl). If the payer only acquires this knowledge later, he must adjust the deduction of input VAT only in circumstances where he recoups the advance payment from the contracting party.

In its letter of 23.04.2018, the Federal Ministry of Finance withdrew the so called “French Fries Decree”. Until very recently, a supplier established somewhere in the Community territory outside Germany could, under certain circumstances, invoice its German customers with German VAT, even where the recipient of the goods was already known at the beginning of the transport in the country of departure. The Federal Ministry of Finance has cited the avoidance of the risk of tax losses as the reason for the change, which applies to all open cases. The Federal Ministry of Finance has granted German customers a transitional period until 31.12.2018 for deducting input tax.

In its legally binding judgement of 16.03.2018 (1 K 338/16 U), the tax court Düsseldorf granted input VAT deduction from an incomplete invoice. The incomplete invoice did not explicitly refer to any other invoice documents, which contained the missing information. Nevertheless, the tax court Düsseldorf granted the input VAT deduction anyway. This is because a specific and unambiguous reference to other accounting documents relating to the incomplete invoice was derived from the factual connection. It is not required that an incomplete invoice explicitly refers to other invoice documents.