In its circular of 23 October 2013, the Federal Ministry of Finance made statements regarding the effectiveness of VAT clauses in contracts for the purchase of immovable property. According to this circular, only unconditional clauses retroact to the time the contract was concluded.
The German Federal Fiscal Court passed its judgment (XI R 4/11) regarding VAT deduction for players‘ agent commissions on 28 August 2013. The key question is whether the players’ agents render services to the soccer club. The German Federal Fiscal Court considers an exchange of services to be given only in exceptional cases. The German Federal Fiscal Court could not determine whether such an exchange of services did occur in this particular legal case. The German Federal Fiscal Court has remitted this case back to the tax court of first instance.
Within the EU two different interpretations of the special scheme for travel agents exist, the traveler-based approach and the customer-based approach. In cross-border transactions this could result in double-taxation or non-taxation. In its decisions of 26 September 2013, the ECJ came to the conclusion that the EC-VAT-Directive must be interpreted uniformly by following the customer-based approach. Consequently, the national regulations following the traveler-based approach, like Art. 25 of the German VAT Act, have to be put to the test.
Currently, the fight against VAT fraud is on everyone’s mind. The EC-Directive on the Quick Reaction Mechanism as well as the EC-Directive on the optional application of the reverse-charge mechanism became effective on 15 September 2013. Furthermore, according to a recent study, 2011 VAT losses amounted to approximately 193 billion euro. Hence, it is not surprising that the EU member states are, in addition to VAT rate changes, focusing their attention on measures to fight tax fraud.
On May 2013, the XI. Senate of the German Federal Fiscal Court passed its latest judgment regarding chain transactions. It is the subsequent decision to the ECJ’s judgment regarding the legal case VSTR (judgment of 27 September 2012 – C-587/10). The key question is about determining to which of the supplies the transport should be ascribed if the middle entrepreneur transports or dispatches the goods. The XI. Senate rejects the jurisdiction of the V. Senate and its assignment criterion. From the XI. Senate’s perspective, the German VAT administrative guidelines contradict the ECJ’s jurisdiction.
The fiscal authority is to impose VAT on the cross-border provision of a company car at the residence of the final consumer. This means that the German employer now has to pay foreign VAT if employees in Germany, who have their residence in another EU member state, receive a company car which is also for private use.
The Federal Ministry of Finance’s final circular has been released and provides much needed relief in many aspects. However, the fiscal authority does not accommodate the tax payer in all aspects. The amended “non-objection provision” stands out as being the most potentially important change.
By judgment of 8 August 2013, the Federal Fiscal Court changed its judicature on the characteristic of organizational links thereby increasing the requirements for a VAT group. Companies should check if they still fulfill the requirements for a VAT group.
Therefore, professional guardians can retroactively refer to the European Union law and claim tax refunds with re-troactive effect. The latest Supreme Tax Court and Euro-pean Court of Justice’s jurisdiction suggests that previous national tax exemption rules were interpreted too restrictively.
By judgment of 13 March 2013 (3 K 235/10), the tax court Munich recognized partnerships, for the first time, as being potential controlled members of a VAT group. This judgment allows plenty of scope for companies and also contributes to tenure neutrality.