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Umsatzsteuer Newsletter 11/2021
Non-taxable grants to non-profit institutions
In its decision of 23 September 2020 (XI R 35/18), the Federal Fiscal Court held that financial allocations from shareholders to a joint subsidiary can constitute genuine (non-taxable) grants. The mere exercise of the shareholders’ general interests is not sufficient to assume a taxable supply. The Federal Fiscal Court has now clarified its previous restrictive jurisprudence based on recent ECJ judgments. It is also to be welcomed that the Federal Fiscal Court interprets the concept of competition within the meaning of Art. 132 lit. f) and I) of the EU VAT Directive in a restrictive manner.
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Umsatzsteuer Newsletter 10/2021
VAT also on discarded goods?
The Federal Ministry of Finance has commented, in detail, on the question as to how in-kind donations to charitable institutions should be treated from a VAT perspective. The tax authorities intend to distinguish between items that are no longer marketable, items which have limited marketability, and marketable items, and want to determine the taxable amount accordingly. This approach may result in tax disputes. A better approach would have been to deny a taxable supply carried out free of charge in the first place.
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Umsatzsteuer Newsletter 09/2021
Input VAT Deduction for Intra-Community Acquisitions and Services – Tense Relaxation
German taxable persons are relaxed when it comes to deducting input VAT from intra-Community acquisitions and services. The German VAT Act does not impose any formal requirements for the deduction of the corresponding input VAT. This is often different in other EU Member States. Therefore, it is risky to transfer the German ‘understanding’ of such transactions to other EU countries. In the worst case, violations can result in the refusal of input VAT deduction. In its judgement of 18.03.2021 (Case C-895/19), the ECJ considered a Polish provision to infringe EU law. However, this amounted to only one mine in a rather extensive minefield.
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