All good things come in threes: the changeover to the new regulation of legal entities under public law has, once again, been postponed. This time until 31 December 2026. Time to take care of other things, such as the new regulation of VAT exemption for educational services. Publicly organised educational institutions, as well as non-profit organisations, have a particular interest in ensuring that VAT exemption in this area continues to be guaranteed.

Instead of the major reform of educational services envisaged in the government draft, in the end, only a small reform has been adopted. Although the certification procedure has been retained, it refers to new content, meaning that all providers urgently need a new certificate. This will be impossible until 1 January 2025. The distinction between educational and professional training, with regard to the existence of a systematic intention to make a profit, has not been implemented. In the commercial education sector, this may lead to unwanted VAT exemption and loss of input VAT deduction. It is also incomprehensible as to why the legislator has failed to resolve the chaos created by the German Federal Ministry of Finance's letter of 29 April 2024 in the online education sector. There is also a short-term need for adjustment here, due to a new place-of-supply-rule.

The Annual Tax Act 2024 was approved by the Federal Council on 22 November 2024. This will result in extensive VAT changes. In this newsletter, we provide you with an overview of the upcoming changes. Over the next few days, successive newsletters will take a more detailed look at individual changes.