The legal requirements for fixed establishments are an ongoing source of questions for the ECJ. In previous judgments, the ECJ ruled that a subsidiary can constitute a fixed establishment of its parent company. In the legal case Berlin Chemie A. Menarini SRL (C-333/20), the ECJ was, once again, asked to consider the question of whether a taxable person, who uses the human and technical resources of an affiliated company, constitutes a fixed establishment.
In 2014, the German Federal Fiscal Court ruled that private hospitals can provide hospital and medical care exempt from VAT by invoking Union law. Since then, there have been many individual cases of dispute between private hospitals and the tax authorities. The issue is often focused on whether the private hospitals fulfil the Union law requirement of “comparable social conditions”. Now, in its judgment of 7 April 2022 (C-228/20), the ECJ specified criteria, on the basis of which, the assessment is to be carried out.
With its letter of 8 July 2021, the Federal Ministry of Finance published its change of view on the VAT treatment of supervisory board members. According to this, the activity of a supervisory board member is only subject to VAT if at least 10% of the remuneration for this duty is variable. In its most recent letter of 29 March 2022, the Federal Ministry of Finance now clarifies important questions of application: The time of supply has now been redefined. Key points for determining the 10% threshold have been shifted. New non-objection regulations have been provided.
The Federal Fiscal Court recently had to decide the rather exciting question of whether in-game renting services fall within the scope of German VAT. It ultimately found that they do not. However, the Court ruled that any exchange of in-game currency for real money on an exchange platform managed by a gaming operator does constitute a supply of service within the scope of German VAT. The consequences for gaming operators and players are significant.
Not every grant is subject to VAT. The Federal Fiscal Court‘s decision of 18 November 2021 (V R 17/20) marks a change in its jurisprudence. The assessment of whether a grant is subject to VAT is not only based on the underlying legal relationship between the grantor and the recipient of the grant. The “economic reality” of the situation is also crucial.
The war in the Ukraine is causing worldwide horror but has also given rise to a wave of solidarity. Both private taxable persons and public sector companies are providing support in a variety of ways. For example, sports halls and holiday flats are being turned into emergency shelters. Taxable persons are helping through in-kind donations and money. The tax authorities are supporting this collective commitment of society through (value added) tax relief.
The Federal Fiscal Court granted a municipality input VAT deduction from the construction of a suspension rope bridge, despite no consideration having been charged for the use of the bridge. Following the jurisprudence of the ECJ in the legal case Sveda, the Federal Fiscal Court recognised the direct and immediate link due to the proximity of the bridge to paid parking spaces. A very welcome windfall for the plaintiff municipality. However, the Federal Fiscal Court’s decision of 20 October 2021 (XI R 10/21), which was only published last week, is not just interesting for legal entities under public law. Rather, the Federal Fiscal Court provides numerous indications that input VAT deduction may also be possible for procured supplies which, at first glance, are not directly and immediately linked to taxable output supplies.
The German Federal Fiscal Court has changed its previous case law and henceforth no longer allows any VAT exemption for swimming lessons. As expected, it thus follows the ECJ decision Dubrovin & Tröger GbR – Aquatics (C-373/19). Accordingly, the scope of application of the VAT exemption for educational services is now severely restricted. At the same time, however, the German Federal Fiscal Court provides valuable advice on how to charge for services without VAT in the future. All providers of educational services are affected by the decision and should now examine the VAT assessment of their courses and events.
+++ EU member states take measures to fight inflation +++ CROATIA lowers VAT rates on various everyday goods +++ FRANCE grants transitional period for import VAT declaration and obtains authorization to introduce e-invoicing +++ POLAND temporarily lowers VAT rates on food, beverages and agricultural products +++ ROMANIA publishes list of goods, for which e-invoices must be issued +++ SERBIA further postpones mandatory use of e-invoices +++ SLOVENIA introduces reverse charge +++ UNITED KINGDOM to introduce plastic tax in April 2022 +++
Positioned at the interface between VAT and insolvency law, sec. 55 para 4 of the German Insolvency Statute (InsO) is of crucial importance to the tax authorities, in their capacity as insolvency creditors, when it comes to the successful recovery of a VAT claim (debts incumbent in the estate) or the loss of a claim (insolvency claim). The legislator has now amended sec. 55 para 4 of the German Insolvency Statute, effective as from 01.01.2021, and extended it to cases of preliminary debtor-in-possession-management. In its letter of 11.01.2022, the Federal Ministry of Finance has now commented on some controversial questions concerning the amended section.
