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In two judgments of 30.03.2023, the ECJ comes to the conclusion that the public sector does not act as a taxable person when it comes to loss-making activities. In this case, the taxation of supplies can be omitted. On the other side of the coin, however, is the denial of input VAT deduction. Many local authorities today tend to benefit from generous treatment in the form of the granting of input VAT refund. This practice may come to an end if the Federal Fiscal Court adopts the ECJ's new line of reasoning in its jurisprudence.
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VAT groups are an ongoing source of questions. The ECJ has just found it permissible, under Union law, for a controlling company to be the taxable person under national law. Meanwhile, the next legal question of considerable significance has already arisen: Are intra-group supplies really non-taxable? This question was recently referred to the ECJ by the V. Senate of the German Federal Fiscal Court. In comparison the XI. Senate’s change in jurisprudence, according to which a majority of voting rights is no longer required for financial integration, becomes almost insignificant.
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As from 1 January 2023, the German tax authorities no longer treat guarantee commitments against payment as subject to VAT but instead as subject to Insurance Premium Tax. The tax authorities developed this perspective following the Federal Fiscal Court’s ruling of 14 November 2018 (XI R 16/17), which has resulted in many uncertainties. Recently, new interpretive FAQs were published by the tax authorities. While some statements surprise, other issues remain unclear. Unfortunately, the FAQs do not provide the legal certainty many had hoped for.
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