The German Federal Fiscal Court (BFH) has ruled that no splitting requirement is applicable for the supply of rental services, which would require the supplies to be split into separate taxable (operating equipment) and VAT exempt parts (the letting of immovable property and buildings) pursuant to sec. 4 no. 12 sentence 2 UStG. In its decision of 22 March 2023, the BFH thus changes its case law in its implementation of the ECJ ruling in the proceedings C-516/21. Sec. 4 no. 12 sentence 2 UStG does not apply to the provision of permanently installed operating equipment if it is an ancillary supply to the VAT-exempt rental service as a main supply, which is VAT exempt pursuant to sec. 4 no. 12 sentence 1 lit. a UStG.
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