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The application of the margin scheme, in accordance with sec. 25a of the German VAT Act, is subject to strict requirements. Its application therefore involves considerable risks. Recent court decisions in fields such as used car sales, furniture upcycling, and online goods sales demonstrate this to be the case. Resellers wishing to apply the margin scheme should not blindly rely on information from upstream suppliers. The European Public Prosecutor’s Office is currently conducting criminal investigations into this issue in the motor vehicle trade sector.
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According to the ECJ, loss compensation payments for public transport are not subject to VAT. With this judgment, the ECJ also confirms the position of the German Federal Fiscal Court, according to which such grants are not generally subject to VAT. The special bonus: the input VAT deduction is not affected by the compensation payment either. We now have a little more legal certainty and clarity on the subject of grants.
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The central settlement procedure, with its numerous service relationships, was subject to a far-reaching change in case law in 2014. This ruling was eagerly awaited because it could have turned back the clock. That was what the court of first instance intended. However, the Federal Fiscal Court has confirmed its now well-established position. On the one hand, this creates legal clarity, but on the other hand, it may also necessitate urgent adjustments. Central settlement providers, who have not implemented the change in case law because they did not consider it applicable to their case, are still reducing their VAT, possibly unlawfully. They must immediately review the VAT treatment of their service relationships and, if necessary, adjust their account settlements.
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