In the case Larentia + Minerva, the German Federal Fiscal Court intended to restrict VAT deduction for holding companies by assuming that holding companies always have a non-economic sector. On this occasion, the Federal Fiscal Court was thwarted by the ECJ, which did not agree with it. Now, the German Federal Fiscal Court is attempting to, once again, imply a non-economic activity in a holding company. It seems the court came to the right conclusion, considering the specific facts of the judgment. However, the court was only able to imply a non-economic activity due to the existing weak facts and the unfortunate argumentation of the plaintiff. Therefore, the findings of the court are to be taken with caution and cannot be generalized. Affected companies should prepare and provide sufficient documentation.

Great uncertainty surrounds the determination that there is need for amendment: Is one required to submit an effective self-disclosure in accordance with sec. 371 General Fiscal Code or is a simple amendment in accordance with sec. 153 General Fiscal Code sufficient? Many questions remain unanswered which has resulted in significant irritation for practitioners and their clients alike. The Ministry of Finance has now gone some way in clarifying the Fiscal Code Application Decree. The Ministry’s message: Companies which have implemented an internal control system will be in a better position in the future. This is because such a system will be seen as an indication of an absence of malice. Amendments may then be made in accordance with sec. 153 German General Fiscal Code.

The settlement of past property developer cases has stagnated due to the Federal Fiscal Court decision of 27.01.2016. According to this decision, the point in time the property developer pays the VAT amount to the supplier is decisive as regards the tax assessment for the supplier and the property developer’s refund claim. The result is property developers losing their interest return. The fiscal authorities have now discontinued payments to property developers until further clarification. In its current judgment, the tax court in Münster opposes the Federal Fiscal Court’s opinion. An appeal is now pending.