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Umsatzsteuer Newsletter 35/2013
Calculation of deductible proportion of VAT
Calculating the deductible proportion of VAT for mixed-use buildings based on the ratio between the area of the premises allowing for VAT deduction and that of the premises not allowing for VAT deduction is compatible with EU law. This is the main thrust of a decision by the German Federal Tax Court. What is more interesting, however, are the further comments regarding input VAT deduction. The Federal Tax Court interprets the rule regarding the determination of the proportion of input VAT deduction in such a way that the allocation of input VAT according to economic criteria will only apply to those VAT amounts that are subject to adjustment of input VAT deduction as referred to in Art. 184 – 192 Directive 2006/112/EC.
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Umsatzsteuer Newsletter 34/2013
ECJ resubmission for care facilities
With its decision of 21 August 2013, the German Federal Tax Court resubmitted to the ECJ the question of when an organization can be defined as “being devoted to social wellbeing”. This question is particularly relevant for the purpose of determining tax exemption for services which are provided in the context of care and nursing.
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Umsatzsteuer Newsletter 33/2013
Late success for property developers – Federal Fiscal Court puts Federal Ministry of Finance in its place
By judgment of 22 August 2013 (V R 37/10), the Federal Fiscal Court decided that the reverse-charge-scheme for construction work in relation to immovable property according to sec. 13b of the German VAT Act in principle is no longer applicable for supplies to property developers. However, the decision of the Federal Fiscal Court is not only of importance to property developers. It has put the tax authorities in their place as it has dismissed various regulations by the tax authorities due to the breach of the principle of legal certainty. This decision also has an effect on other areas as the general simplification rules according to sec. 13b of the German Administrative Circular no longer provide certainty and the 10% hurdle for the qualification as a reseller of power and gas may become invalid.
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