This is the 7th part of our Newsletter series on the Annual Tax Act 2020. Today, we will focus on the legislator’s intended implementation of a so-called decentralised taxation procedure for federal and state authorities. The tax authorities already allow individual dependent organisational units of the federal and state governments to be treated as taxable persons. However, a legal basis for this does not yet exist. Such a legal basis is now to be established, so that the individual organisational units may exercise all rights and obligations under VAT law after the option period has expired. This represents a simplification. However, many questions remain open.
The sixth part of our newsletter series on the Annual Tax Act 2020 deals with the changes regarding the healthcare, nursing care and social services sector. The legislator is further aligning the German VAT law in this sector to European law. The draft of the Annual Tax Act 2020 provides for a number of selective extensions of the corresponding VAT exemptions. In particular, the assessment of the 25 % threshold, provided for in the residual provision of sec. 4 no. 16 German VAT Act, is to be adjusted. Furthermore, the legislator wants to clarify, that short-term room rentals by student unions to students are VAT-exempt.
In the fifth part of our newsletter series, we explain the reorganisation of MOSS in the Annual Tax Act 2020. The MOSS procedure will be replaced by the OSS procedure. For those with fulfilment center structures, new registration obligations in other EU countries will probably arise.
In the fourth part of our newsletter series, we take a closer look at the implementation of the e-commerce package in the Annual Tax Act 2020. The draft law contains new regulations for distance sellers. A uniform and low threshold now applies to intra-EU distance sales. However, the changes will only make life easier for a certain category of distance sellers. For those with fulfilment center structures, new registration obligations in other EU countries will probably arise.
The third part of our newsletter series on the Annual Tax Act 2020 deals with the special regulation for the import of consignments with a maximum value of EUR 150. For such low value consignments, which are to be delivered directly from the third country to customers in the country of import, the presenting service providers will, in future, be able to carry out the import on behalf of and for the account of the recipient and also pay import VAT on their behalf. However, according to sec. 21a of the German VAT Act (draft), an application by the service provider is required for this purpose.
In the second part of our short series we are examining the implementation of the E-Commerce Package in the Annual Tax Act 2020. The draft bill contains significant changes for electronic interfaces (in particular online marketplaces). In certain cases, a deemed chain transaction according to sec. 3 para. 3a of the German VAT Act (draft), between an online trader, an electronic interface (e.g. online marketplace) and an end customer. The electronic interface (e.g. online marketplace) thus becomes liable for VAT.
The German Federal Ministry of Finance has published the draft bill for an Annual Tax Law 2020. Extensive changes are planned in the area of VAT. In a short series, we will take up and examine one topic each day over the next few weeks. In this newsletter we will first give a general overview of the planned changes and when they could come into force.
In practice, the distinction between payment for damages and remuneration for a supply plays a recurring role. The ECJ recently ruled on this question in the case of Vodafone Portugal. In this ruling, the ECJ found that amounts paid by customers to their contractual partners in the event of premature termination of a contract, are subject to VAT. This ruling is significant for all companies which conclude contracts with a predetermined minimum period. However, as the German VAT Circular has, so far, taken a different view, the decision is likely to only have implications for the future.
Does a server cabinet constitute part of a computer hosting centre building? The current decision of the ECJ of 02.07.2020 on this issue in the case A Oy (C-215/19) was eagerly awaited. This is because the facts of the case can be readily transferred to everyday business life in the plant and mechanical engineering sector. There, one is constantly exposed to the question of the possible connection of transactions to immovable property. Moreover, the ultimate answer to this question should be the same in all Member States. In practice, however, uniform application of the standards on the concept of immovable property within the European Union is still a long way off.
In the ECJ ruling of 18 June 2020 in the case KrakVet (C-276/18), the primary issue was whether a company can engage in "VAT rate shopping" by structuring its transport arrangement in a particular way. KrakVet’s goal for its distance sales to Hungary was only to pay 8% Polish VAT, rather than 27% Hungarian VAT. The specific question was whether, according to the chosen arrangement, the goods were dispatched or transported "by the supplier (KrakVet) or on its behalf" and thus whether Art. 33 of the VAT Directive was applicable. Similar wording is also found in Article 36a VAT Directive that stipulates to which supply the transport shall be ascribed to in chain transactions. One must therefore ask oneself what significance the ECJ's statements on transport arrangements have beyond the distance sales.