On 7 March 2013, the German Ministry of Finance passed the long awaited administrative circular on VAT groups. The tax authority has changed its opinion on the characteristics of organizational links. The new principles will apply from 01 January 2014. Companies should therefore make use of the transitional period and check whether they comply with the requirements for a VAT group.
In its judgment of 14 November 2012, (file no. XI R 8/11), the Supreme Tax Court ruled that there will be no VAT-exemption if there is no statement on the invoice that the supply is a VAT-exempt intra-Community supply.
By judgment of 21 February 2013, case C-18/12 – Zambek – the European Court of Justice (ECJ) ruled that entrance tickets for open-air swimming pools and water parks (aqua parks) are VAT-exempt. This judgment is of particular significance for the German legislature. It allows for more scope in the future and maybe even into the past.
On 31 January 2013 the European Court of Justice has passed two more judgments in cases regarding legitimate expectation when deducting VAT. Principally, the customer has the right to deduct VAT even if the tax authority assumes that the supplier has not carried out any supply. If the tax authority wants to deny the deduction of VAT, even in such cases it is for the tax authority to prove that the customer knew or should have known about a tax fraud related to the supply.
The Supreme Tax Court’s V and XI Senate currently hold diverging views on VAT deduction by shareholders. While the XI Senate construes the European Court of Justice’s statements in the case of Polski Trawertyn quite widely, thereby making VAT deduction easier, the V Senate adheres to its restrictive interpretation. The European Court of Justice will have to clarify these interpretation issues.
It was not until the raid of the Deutsche Bank in Frankfurt am Main (Germany) in December 2012 that everyone first started talking about CO2 emission certificate tax evasion. Tax, in an amount exceeding EUR 260m, is said to have been evaded. Six defendants were sentenced to long-term imprisonment following the Frankfurt am Main Regional Court’s first judgment. The Federal Court of Justice rejected the defendants‘ appeals. Further criminal proceedings are pending.
Due to the mandatory adaption of Invoicing Directive 2010/45/EU, all EU member states had to amend their national VAT laws by the end of 2012. In addition, VAT rates are rising again and some other amendments require reporting.