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Umsatzsteuer Newsletter 12/2025
German Federal Fiscal Court on bonuses for centralised settlement – clarity and need for action at the same time
The central settlement procedure, with its numerous service relationships, was subject to a far-reaching change in case law in 2014. This ruling was eagerly awaited because it could have turned back the clock. That was what the court of first instance intended. However, the Federal Fiscal Court has confirmed its now well-established position. On the one hand, this creates legal clarity, but on the other hand, it may also necessitate urgent adjustments. Central settlement providers, who have not implemented the change in case law because they did not consider it applicable to their case, are still reducing their VAT, possibly unlawfully. They must immediately review the VAT treatment of their service relationships and, if necessary, adjust their account settlements.
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Umsatzsteuer Newsletter 11/2025
VAT exemption for Private clinics: An old approach rediscovered?
For many years, private clinics have been fighting for VAT exemption on their services. Many tax audits are stuck because the conditions for VAT exemption are highly controversial. A ruling by the German Federal Fiscal Court (BFH) could point to a compromise. The issue is that the part of the service provided by the private clinic that constitutes ‘medical treatment’ could be VAT exempt, while the part that constitutes ‘accommodation’ could be subject to VAT. However, this is only possible if, in each individual case, both components constitute a separate service. If this division is not considered possible, the situation remains unchanged: 100% VAT exempt or 100% subject to VAT.
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Umsatzsteuer Newsletter 10/2025
A turnaround with need for action – new Federal Ministry of Finance’s letter on energy generation plants
In its letter dated 31 March 2025, the Federal Ministry of Finance has made a 180° turn on its previous administrative practice concerning the operation of energy generation plants. In the case of decentralised consumption of electricity (so-called direct consumption), there is no (longer) a back and forth supply of electricity under VAT law between the operator of the energy generation plant (photovoltaic, biogas plants and cogeneration units) and the grid operator. In addition, the Federal Ministry of Finance has revised the use of heat, which is a contribution of goods without consideration, in CHP plants. Action is required by 1 January 2026.
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