In a decision subsequent to the ECJ decision A & G Fahrschul-Akademie (C-449/17), the Federal Fiscal Court ruled that driving lessons are not exempt from VAT (Az: V R 7/19). In so doing, the Court confirmed, for the very first time, its acceptance of the narrower definition of “tuition”. Although the decision itself is not surprising, the restricted interpretation will have far-reaching consequences for those educational services which have, “traditionally”, been exempt from VAT. The judgement corresponds to the legal reorganization of educational services planned for 01.01.2021 and is thus important for all suppliers.
The Federal Ministry of Finance recently published the German Tax Accounting Standards (GoBD) (please see KMLZ Newsletter No. 33/2019). These new principles also provide basic instructions as regards the requirements for internal control, which play a key role in tax compliance.
On July 11, 2019 the German Federal Ministry of Finance published the final version of the revised Circular on the principles for the orderly keeping and retention of books, records and documents in electronic form and for data access. The revision has become necessary in order to update the Circular, which has now been valid for almost 5 years, to reflect technical developments and to eliminate the resulting legal uncertainties. In particular, there are simplifications in the area of digitisation of documents and conversion of electronic documents as well as the keeping of electronic records abroad. At the same time, the importance of procedural documentation is being brought further into focus.
What is the extent of the direct and immediate link, which must exist between an input supply and a taxed output supply, in order for a taxpayer to be entitled to input VAT deduction from the input supply? The German Federal Fiscal Court had the opportunity to comment on this question - following on from the ECJ’s case law in Iberdrola and Sveda. However, it decided to flip the matter over Luxembourg and - in addition to two further questions - refer the question regarding the link to the ECJ (Ref.: XI R 28/17). Even if the Federal Fiscal Court has not committed itself, this referral can be seen as a positive sign that it may, in the future, be prepared to broaden the concept of what it considers to be a direct and immediate link. This opens up new sources of input VAT for taxpayers – especially in the case of infrastructure construction works.
PORTUGAL obliges to register in central register of beneficial owners and extends deadline for application of certified invoicing software +++ HUNGARY allows input VAT deduction before registration +++ CHILE stops introduction of digital tax +++ GREECE plans real-time reporting of invoices +++ AUSTRIA plans tax on digital advertising revenues and postpones introduction of margin scheme on B2B travel services +++ POLAND publishes new draft law on split payment and postpones introduction of new SAF-T +++ SLOVAKIA reduces VAT rate for accommodation services
After criticism from the associations, the Federal Ministry of Finance has, by the publication of its letter of 18.06.2019, once again, amended section 8.1 of the German VAT Circular as regards the zero-rating of the supply of goods and services for sea-going vessels and aircrafts. The question as to whether the vehicle already exists and whether the zero-rating applies will no longer be a question of launching the vehicle, but of acceptance by the customer. The Federal Ministry of Finance had only introduced the launching date as the decisive date for the existence of a sea-going vessel into the German VAT Circular in its letter of 05.09.2018.
In Germany, the activities of members of supervisory boards are generally subject to VAT. In its judgement in the Dutch case IO of 13.06.2019 (C-420/18), the ECJ decided otherwise. In this case, the ECJ denied the independence of a member of the supervisory board of a foundation. The ECJ ruled that a supervisory board member does not act in his own name, on his own account or on his own responsibility and is subordinate to the supervisory board itself. The individual member does not bear any economic risk associated with his activity. The individual powers of the members of German supervisory boards of stock corporations and cooperatives are already limited by law to a similar extent as referred to in the ECJ proceedings. The decision is therefore likely to result in the alteration of the taxation of German supervisory boards in terms of non-taxability. If the activity of the supervisory board member is not taxable, there is no right for VAT deduction. For the past, the clear guidelines of the German VAT circular should protect legitimate expectations. This is particularly important with regard to the deduction of the input VAT arising from purchases.
The so-called Quick Fixes will come into force on 01.01.2020 and will lead to some changes of the VAT laws in the EU member states. There are a number of questions in doubt in this regard. The EU Commission therefore considers it necessary to publish guidelines in order to ensure uniform application within the EU. It has now published initial thoughts on the subject and asked the Member States for further comments.
France has asked the European Commission's VAT Committee for an opinion on the VAT treatment of recharging electric vehicles (so-called "e-charging"). The VAT Committee will give its opinion on whether e-charging constitutes a single supply and whether it is to be qualified as a supply of services or as a supply of electricity and also whether the ECJ jurisprudence in Auto Lease Holland and Vega International could be applicable to supplies made by EMPs. Once the opinion of the VAT Committee is published, conclusions could also be drawn as to how the supplies of entrepreneurs with a comparable business, such as fuel card issuers, are to be treated from a VAT perspective.
In its letter of 27.05.2019, the Federal Ministry of Finance comments on the VAT treatment of prize money and restricts the scope of the application of the principles established by the ECJ in the Baštová case. It is necessary to make a clear distinction between placement-dependent and placement-independent prize money. Hence, participants in such competitions are required to make a split of the prize money in future.