There are new criteria regarding chain transactions. For determining the supply, to which the transport is ascribed, it is decisive when the second person acquiring the goods receives the power to dispose of the goods. This also applies if the second person acquiring the goods transports or dispatches the goods. Therefore, the transportation order, which the German legal practice has always referred to, loses its importance. All chain transactions must be thoroughly checked.
Curative treatment supplied by dentists is VAT exempt. This VAT exemption however is not applicable to the supply of dental prostheses in Germany. Such supplies are subject to German VAT. Dentists are not permitted to deduct input VAT from the purchase of dental prostheses that are used by the dentists for their supplies of VAT exempt services. The ECJ has decided that this is also applicable for intra-Community acquisitions of dental prostheses in Germany. Accordingly, dentists are often required to pay VAT without being entitled to deduct input VAT. Likewise, the supply of dental prostheses by denturists is subject to German VAT
Sec. 2 para. 2 no. 2 of the German VAT Act regarding the requirements for a consolidated VAT group is formulated more restrictively than the underlying art. 11 of the VAT Directive. Therefore, entrepreneurs often refer to the EU law which is, in many cases, often more favorable for them. Although the tax court Saarland rejected the direct application of art. 11 of the VAT Directive in the particular case, entrepreneurs should continue to refer to this regulation until the Federal Fiscal Court clarifies this issue.
If the requirements, according to the wording of a national VAT exemption regulation, of sec. 4 of the German VAT Act are not met, VAT exemptions will usually be denied by the German tax authorities. The European law is not taken into consideration. The Federal Court of Finance repeatedly directly applied a VAT Directive tax exemption regulation, in this case to supplies carried out by private hospitals. Supplies carried out by private hospitals are not subject to VAT, independent of their certification with respect to social security law.
The Federal Ministry of Finance has comprehensively reviewed the 1995 GoBS and the 2001 GDPdU. Both have now been amended and merged into one document, namely the GoBD (principles of duly keeping and retaining books, records and documents in electronic form as well as regarding data access). The review was overdue. What is new here is that the GoBD noticeably refers to VAT. In light of the above and due to the growing significance of complete and effective tax compliance, companies should check the impact of the new GoBD on their internal VAT related processes.
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.
It has been discussed for quite some time now if and how non-taxable grants may affect the deductible proportion of input VAT. Proceedings before the Federal Fiscal Court have already shown that taxable persons need to participate at an early stage. If they do not, the amount of input VAT may be estimated and grants may be considered negatively. However, taxable persons are in the position to avoid such unpleasant surprises.
The law on amendment of the German Fiscal Code to match the Customs Code of the European Union and the amendment of further tax provisions (ZollkodexAnpG) dated 30 December 2014 also serves to amend the German VAT Act. In addition to minor changes, the Federal Ministry of Finance is authorized to extend the scope of the reverse charge mechanism by statutory instrument within the scope of the Quick Reaction Mechanism. The law also restricts the reverse charge mechanism as regards metals. The German legislature has amended the recent extension which came into effect on 1 October 2014 (so-called Croatia Act).