On 02.10.2018, the EU Finance Ministers in the ECOFIN reached a decision on a number of measures in the field of VAT legislation. The ECOFIN agreed on the so-called “quick fixes” proposed by the EU Commission last year and these shall apply as of 01.01.2020 (cf. KMLZ Newsletter 32/2017). Furthermore, the Council allowed, until 30.06.2022, to apply temporarily the generalised reverse charge regime. In the future, member states will be permitted to apply a reduced VAT rate or a zero rate to electronic publications. The agreed measures to strengthen administrative cooperation between member states shall apply as of 01.01.2020.

The Federal Ministry of Finance limits the scope of application for supplies in maritime transport and aviation (letter of 05.09.2018). The transactions will be zero-rated, if the watercraft or aircraft can already be clearly and unambiguously identified at the time of the supply. Zero-rating can also be applied to supplies carried out at the earlier stage of the commercial chain where the supplier is able to prove the final purpose of the supply destined for a tax-advantaged watercraft or aircraft, by means of accounting and other documentary evidence. The tax benefits only apply to existing watercraft or aircraft.

VAT claims are often accompanied by both an assessment of interest, pursuant to sec 233a German General Fiscal Code, as well as late payment penalties, pursuant to sec 240 German General Fiscal Code. With regard to the interest rate, constitutional doubts are currently being raised (see KMLZ Newsletter 25/2018). The Fiscal Court Munich has now also expressed these same doubts regarding late payment penalties in circumstances where the taxpayer is over-indebted and insolvent for periods dating from 2015 (decision of 13.08.2018 – 14 V 736/18). In such cases, the late payment penalties are to be entirely waived. Accordingly, a managing director cannot be held liable.