In the past, the ECJ has often had to decide cases on VAT exempt intra-Community supplies. The most recent decision (decision of 14.06.2017 – legal case C-26/16), demonstrates an important procedural aspect: Where the tax authority has already examined the affected transactions and the existing documentation and did not object, it may not retroactively deny tax exemption due to the principle of legal certainty. This also applies beyond intra-Community supplies.
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.
The Federal Fiscal Court has decided that the controlling company's insolvency terminates the VAT-group, as does the insolvency of the controlled company. This also applies if the same trustee / insolvency administrator is appointed for the former controlling company and the previous controlled company by the court. This judgment by the Federal Fiscal Court serves to oppose an earlier circular of the Upper Tax Authority Frankfurt/Main regarding the insolvency of the controlling company.
The law to decrease administrative burdens (Bürokratieentlastungsgesetz II) introduces an increase in the threshold for invoices for small amounts from EUR 150 to EUR 250. This amendment has retroactive effect as from 01.01.2017.
In its judgment of 4 May 2017 – C 274/15 – Commission/Luxemburg, the ECJ gave its opinion on the independence of associations and immediacy of the use of transactions within the meaning of Art. 132 para. 1 lit. f of the VAT Directive. This judgment is the first of a series of ECJ judgments on the interpretation of this regulation. Opinions on various aspects of further proceedings currently pending before the ECJ have already been published. The ECJ’s case law will have a significant impact on German law, as Germany has only implemented the Union tax exemption regulation for cost sharing associations to a very limited extent.
Since the introduction of the Mini One Stop Shop (or “MOSS”), tax audits have been a significant but unresolved issue. Member States have not (yet) been able to agree on harmonized rules. Neither the EU VAT Directive nor the VAT Implementation Regulation contain any corresponding provisions. A leaflet published by the German Ministry of Finance on cross-border tax audits now answers some of these questions, at least from a German perspective.
The German Federal Fiscal Court has now published another decision regarding a consignment stock case (V R 1/16). In this case, the German Federal Fiscal Court denied a direct delivery because there was no binding purchase contract in place at the beginning of the transport to the stock. The German Fiscal Court remained true to its principles, which is hardly surprising (see KMLZ Newsletter 03/2017). Another finding of the German Federal Fiscal Court is also interesting: A remuneration which was agreed on by mistake, without VAT, represents a gross amount, from which VAT needs to be subtracted. This is not only relevant for consignment stock cases, but for all cases in which VAT is required to be subsequently paid.
AUSTRIA deals with chain transactions, the simplification for intra-Community triangulations and minimum invoice requirements +++ BELGIUM abolishes advance payments if quarterly VAT returns are filed +++ FRANCE plans real-time reporting of sales +++ HUNGARY plans obligation to electronically transmit invoice details +++ LATVIA obliges newly registered companies to submit monthly VAT returns +++ SPAIN implements real-time reporting of sales as of 1 July 2017 +++ SWITZERLAND amends regulations regarding tax liability and plans referendum on reduction of VAT rates