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Umsatzsteuer Newsletter 42/2022
With the letter, dated 20 October 2022, the Federal Ministry of Finance has implemented the long standing Federal Fiscal Court case law regarding the determination of input VAT apportionment pursuant to Section 15 (4) of the German VAT Act for mixed-used properties. With its letter, the Federal Ministry of Finance binds the tax administration to the interpretation of the Federal Fiscal Court in conformity with the VAT Directive and ECJ case law. This is an important step. The input VAT must be apportioned based on an appropriate apportionment formula, which will be determined and selected by the taxpayer. The tax authorities can only check whether the method is suitable.
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The concept of the “granting of credit” is to be interpreted broadly for the purposes of VAT exemption. This is confirmed by the ECJ in its judgment on the VAT exemption of sub-participations in loan receivables. Despite the special nature of the underlying particular financial instrument, the ECJ assumes a pleasingly clear position with its general statements on the requirements for the VAT exempt granting of credit and continues to develop the broad interpretation manifested in its previous jurisprudence.
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In its letter of 16 September 2022, the Federal Ministry of Finance published a new model form for providing proof that the conditions for VAT exemptions, in accordance with sec. 4 no. 7 of the German VAT Act, for supplies to special institutions (such as NATO troops and intergovernmental institutions) have been met. This new form also serves as proof of the use of goods by certain EU institutions in response to the COVID-19 pandemic within the meaning of sec. 4c of the German VAT Act.
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