Two cases have been referred to the ECJ and are currently pending in which the ECJ has to decide on questions concerning the German VAT group. The core issue in both proceedings is whether the controlling company - as provided for by German law - can be the taxable person and thus the person liable for payment of VAT. In her current Opinion on the proceedings, the ECJ’s Advocate General Medina assumes that German law is contrary to Union law as regards this issue. However, she goes one step further: she seems to consider that (contrary to the previous unanimous opinion) internal transactions within the VAT group are taxable.
The Federal Ministry of Finance has offered welcome clarification concerning transactions in connection with weight accounts. The qualification as a “supply of goods” or “supply of services” depends upon the underlying transaction agreements. The Federal Ministry of Finance has also provided the practice with indications as to when a taxable supply of goods, a taxable supply of services or no taxable supply at all is to be assumed.
Since 1 July 2021, virtual and terrestrial slot games have been taxed differently. Terrestrial slot games continue to be subject to VAT, whereas virtual slot machine games are subject to the virtual slot games tax, which is based on the Racing Betting and Lottery Act. The Fiscal Court of Münster has now raised doubts about the legality of this unequal treatment in suspension of execution proceedings. For the industry sector, it remains to be seen how the Fiscal Courts will decide this issue in future main proceedings.
On 08.12.2021, the state ministries of finance issued a general ruling on appeal proceedings against interest assessments for in accordance with sec. 233a and 238 of the German Fiscal Code. This ruling rejects appeals against interest that accrued prior to 1 January 2019, as being unfounded.
Insofar as taxable persons have not yet paid the subject interest to the tax office, they must now prepare for a corresponding payment. Taxable persons who wish to raise doubts under EU law against the interest assessment will need to file a lawsuit within one year and may file a (renewed) application for suspension of execution.
+++ FRANCE ends prefinancing of import VAT and replaces the DEB +++ POLAND allows to opt for VAT for financial services and introduces e-invoicing platform and VAT groups +++ ROMANIA introduces voluntary e-invoicing for B2G and B2B +++ SLOVAKIA introduces measures to combat VAT fraud +++ UKRAINE taxes electronic services provided by foreign businesses +++ UNITED KINGDOM tightens rules on imports +++
As part of the "quick fixes", a uniform EU simplification regulation, for supplies to other EU Member States via warehouses located there, was introduced with effect from 1 January 2020. In a letter dated 10 December 2021, almost two years after the new sec. 6b of the German VAT Act actually came into force, the German Federal Ministry of Finance (BMF) has now published an introductory circular on this issue, which amends the German Administrative VAT Guidelines. Over 13 pages, the Ministry clarifies questions of doubt for practical handling and now finally also provides more legal certainty. An earlier publication would have been helpful. But as the saying goes, better late than never ...
The transport of export goods is, under certain conditions, exempt from VAT (sec. 4 no. 3 lit. a lit. aa of the German VAT Act). However, as from 1 January 2022, the Federal Ministry of Finance will considerably restrict the present scope of the VAT exemption. While all transport services in connection with exports were previously VAT exempt, this will now only apply to transport services rendered directly to the supplier of the goods or to the customer receiving the goods.
In a letter dated 1 December 2021, the German Federal Ministry of Finance adopts the principles of the business-friendly judgment of the German Federal Fiscal Court for the purposes of the "customary trade description" in invoices. Henceforth: What is usually accepted among merchants as a description of goods and services rendered is sufficient for the purposes of input VAT deduction as regards the customary commercial description of what was supplied. This simplification applies equally to all traders. However, the taxpayer bears the burden of proof as to what is considered customary. Proper invoices thus remain a frequent target of the tax authorities when it comes to VAT.
The Federal Ministry of Finance's letter on the VAT exemption for cost sharing groups, in accordance with sec. 4 no. 29 of the German VAT Act, is finally coming. Although it is still a draft letter, the Federal Ministry of Finance seems to be in the mood for Christmas. The Federal Ministry of Finance’s current point of view gives hope that at least some forms of cooperation will, in future, be able to take place without additional VAT charges. This applies, in particular, to groups of public bodies and non-profit institutions.
The coalition agreement has been sealed. The new federal government has made a real effort to modernise VAT (e-invoicing, reverse charge and import VAT) and, at the same time, to support activities for the common good (in-kind donations, supplies of educational services, inclusive businesses). It is just a pity that the long-awaited reform of the VAT group cannot be expected any time soon. However, we will keep trying.
