Based on new case law, an intermediary is no longer entitled to reduce his output VAT if he refunds to the customer of the transaction procured by him part of the transaction price. The German Ministry of Finance issued a circular confirming this opinion on 27 February 2015. This circular will have a great impact on many agents e.g. of telephone contracts, car dealers, purchasing associations and travel agents. The concerned companies will have little time to amend their structures and their invoicing procedure.

Fiscal authorities often refuse the tax exemption for intra-community supplies of goods arguing that the taxable persons would have been acting in bad faith due to their involvement in perpetrating a tax fraud. In the present proceedings before the Federal Fiscal Court, the fiscal authorities presented, in their view, extensive incriminating evidence, including evidence of the particular company being run as a dummy company, demonstrating a neglected duty of care.

The last recipient in a supply chain is not obliged to correct his input VAT deduction when he receives rebates from the first supplier in the chain from abroad. The German Federal Fiscal Court confirmed this with its judgment of 4 December 2014 (V R 6/13). In such cases, the taxable base for a turnover subject to VAT has not changed. Furthermore, the tax court stated that, in these sorts of cases, the distributor is not obliged to correct his intra-Community acquisitions. As a consequence, it is more profitable to receive rebates from abroad than from a German supplier.