With its most recent referral to the ECJ, the German Federal Fiscal Court (decision of 02.08.2018 – V R 33/17) opens the discussion as to what extent VAT rate reductions are applicable beyond their wording, even if (only) comparable services are rendered. In this context, the Federal Fiscal Court refers to the principle of equal treatment pursuant to Art. 20 of the Charter of Fundamental Rights of the EU. The future scope of the application of the reduced VAT rate could thus be significantly extended. Entrepreneurs should closely follow the further proceedings of the referral. In certain cases, it may now already be recommendable to examine the question of the applicability of a reduced VAT rate.

The tax authorities and tax courts generally deny input VAT deduction from procured consulting services for sales of shares not subject to VAT. In its judgment of 8 November 2018, in the case C&D Foods Aquisitions ApS (C-502/17), the ECJ reminds us that this does not always apply. If the sale of shares serves the economic activity of the taxable person or expands it, an input VAT deduction can be considered. This principle should also apply to other asset transfers not subject to VAT, e.g. supplies of real estate.

With a further ruling, the Federal Fiscal Court has clarified its case law on the transfer of a going concern. In the disputed case, only the inventory was sold. The business premises were not included. The Federal Fiscal Court was required to deal with the question of whether the isolated sale of the inventory constituted the transfer of a going concern, and was therefore outside the scope of VAT.