The supply of electricity by a landlord can, under certain conditions, constitute an independent taxable supply. The supplier of tenant electricity is then entitled to full input VAT deduction from the purchases that are directly and immediately related to the taxable supply of electricity. In its decision published on 26 September 2024, the Federal Fiscal Court clarifies the specific conditions required for a taxable supply to be deemed to be independent and explicitly deviates from the view of the tax authorities (sec. 4.12.1 para. 5 sentence 3 of the German Administrative VAT Guidelines).

Not every grant is subject to VAT. And not every genuine grant reduces the input VAT deduction. The Federal Fiscal Court ruling of 17 April 2024 (XI R 13/21) marks a milestone in this regard. In addition, the Federal Fiscal Court sends a clear message that state grants to local public transport are not subject to VAT. Pleasing news for the entire German public transport sector.

The ECJ has, once again, dealt with the VAT exemption for the management of special investment funds. It ruled that funds (the case in question concerned pension funds) can, in principle, only be managed exempt from VAT if the investor bears a risk similar to that of an investor in a securities fund. However, it is also sufficient if the fund in question is comparable with other funds whose management a Member State regards as VAT exempt. The decision could have an impact on the discussion as to whether the current sec. 4 no. 8 lit. h of the German VAT Act is in conformity with Union law.