On 16.02.2016 the Federal Ministry of Finance published a letter as regards VAT refunds for intra-Community supplies and export supplies, which may prove controversial. The Federal Ministry of Finance denies VAT refund where the supplier invoices with VAT due to a lack of documentary evidence, despite it being determined, that the substantive requirements for zero-rating have been met. The suppliers would have to issue invoices including VAT in cases of any doubt. The recipients should be cautious. Their input VAT refund is at risk. The Federal Ministry of Finance is attempting to prevent tax losses under the VAT refund procedure. Apparently, the letter is not to be applied to the regular assessment procedure. It is to be hoped, that it is also understood by the tax offices.

By judgment of 19 January 2016 (XI R 38/12), the XI Senate of the Federal Fiscal Court handed down its decision for the ECJ-proceedings Larentia + Minerva. The judgment deals with questions regarding VAT deduction for holding companies and VAT groups. The XI Senate follows the V Senate (judgment of 2 January 2015, V R 25/13) in recognizing partnerships as potential controlled companies. This is a pleasing development. It is also positive that “pure” holding companies are entitled to full VAT deduction. However, there is one small drawback as VAT exempt financial transactions may restrict VAT deduction. Clearing accounts and cash pools may develop into a VAT problem.

The tax court Düsseldorf’s recent decision, in a case involving consignment stock, repeated the earlier findings of other tax courts. It confirmed that the circumstances of the specific single case are relevant, particularly, as to whether legally binding orders exist prior to the transfer of the goods to the stock. Only confirmation by the Federal Fiscal Court is, as yet, missing. Meanwhile, the Upper Tax Authority of Frankfurt am Main included these findings in its administrative circular regarding consignment stocks. The Authority also now allows the suspension of proceedings, in the case of appeals. The Upper Tax Authority also extended the list of countries accepting simplifications for consignment stocks, which are also acknowledged by the German tax authorities.