The Federal Fiscal Court has confirmed its established case law on the time limits for input VAT deduction (deci-sion of 13 February 2014, V R 8/13). According to this decision, a taxable person must claim input VAT for the period in which the requirements for input VAT deduction are fulfilled. A claim made in a later period is not permitted. Where appropriate, the taxable person has to file an amended VAT return. Contrary to expectations, the Federal Tax Court has not yet decided whether a taxable person is entitled to recover import VAT in certain cases, without having the right to dispose of the goods.
There is now a new proposal for amending public sector taxation. Section 2b of the German VAT Act is being re-vised with a twofold intention, firstly to comply with the guidelines of the high court legislation and secondly, in an attempt to exclude cooperation between legal entities un-der public law from VAT.
Malaysia is implementing a Goods and Service Tax which is comparable to the European VAT system. The predominant issue within the EU remains the fight against VAT fraud. Switzerland, which is well-known for its entrepreneur-friendly VAT law, will shortly tighten its formal requirements. Italy, Romania and Kosovo, however, have, meanwhile, implemented provisions which offer some relief. Increases in VAT rates are about to come into force in Luxemburg and Portugal. Hence, VAT remains multifaceted in the various countries.
As of 17 May 2014 Ausgangsvermerke include this watermark if the export procedure is connected with a transit procedure, which is terminated by specific German customs offices of destination. In these cases, taxable persons now need to furnish a valid alternative proof in the sense of the German VAT Implementation Code for the export of the goods. However, in general, the Ausgangsvermerk is still valid proof of export supplies.
The Federal Ministry of Finance has again responded to the issue of construction work and has touched up on areas such as legitimate expectations, supplies for private purposes and VAT groups.
The fiscal authorities have commented on the question of taxation for advance and final invoices exceeding the deadline of 14 February 2014. This regulation requires significant manual effort for successful technical imple-mentation
The Federal Fiscal Court has confirmed that subsidies for a canteen operated by a caterer, under certain circumstances - and contrary to the position of the tax authorities - are not deemed to constitute remuneration paid by a third party to the caterer for the supply of meals to employees. Rather, the companies paying subsidies are regarded as directly purchasing canteen operating services. However, in the particular case at hand, the Court denied an input VAT deduction by arguing that the services purchased were intended to be used for services provided free of charge to the employees. Therefore, companies paying subsidies to canteens are still not entitled to input VAT deduction in this regard but should check whether specific circumstances exist which allow for input VAT deduction due to the fact that the personal advantage of the employees is merely an accessory to the requirements of the business.
The Federal Government has submitted a draft for the adaption of the national tax law to reflect the accession of Croatia to the EU and to amend further tax law provisions. However, what is of particular interest is not the accession of Croatia but rather the long overdue corrections to the VAT law, such as those concerning the minimum taxable amount or relating to the VAT exemption rules, which will now be made.
If a taxable person has been granted the privilege of VAT only becoming chargeable at the time the payment is received, he should check whether the approval, granted to him by the tax authorities in this regard, contains a term stating that the approval terminates automatically.
The tax authorities have decided on the controversial topic of VAT treatment of supervisory board remuneration by means of various decrees. A supervisory board can only avoid VAT in exceptional cases. Therefore, there is a need to be particularly prudent, taking all steps necessary to meet the requirements of the tax authorities.
The Federal Fiscal Court takes the position that the German statutory rule, pursuant to which only corporations can be controlled companies of a VAT group, is not in line with the VAT Directive. Also, the Federal Fiscal Court calls into question whether the requirement of the subordination of the controlled company under the controlling company is necessary. The ECJ will have to decide whether partnerships have to be included in VAT groups and whether VAT groups are possible between affiliated companies without being a subordinated controlled company. Companies should now already start taking steps in order to prevent detrimental effects or to take advantage of the decisions of the ECJ.