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.
Just like the European Court of Justice (judgment of 07 March 2013, legal case C-275/11 – GfBk), the Federal Fiscal Court acknowledges, in its latest decision of 11 April 2013, V R 51/10, that advisory services regarding investment recommendations for investment management companies are VAT exempt. Consultants, who charge fees for advising investment management companies regarding the purchase and sale of securities for the investment management company's special investment, benefit from these judgments.
A limited company is not permitted to deduct VAT regarding the expenses incurred with respect to the criminal defence of its CEO even if the criminal charges are connected to his operating activities (Federal Fiscal Court, judgment of 11 April 2013, V R 29/10). The same applies for individual entrepreneurs. It only does not affect VAT deduction if proceedings are also taken against the company.
On 21 June 2013, the EU-Council decided to amend Implementing Regulation (EU) No. 282/2011. Most of the changes are related to the rules regarding the place of supply for telecommunication, broadcasting and electronic services that will be amended with effect as of 1 January 2015. In addition, changes regarding services connected with immovable property have been implemented. Companies should acquaint themselves, at an early stage, with these interpretation rules. The Implementing Regulation (EU) is directly applicable without any further implementation act.
Finally, the so called Amtshilferichtlinien-Umsetzungsgesetz (AmtshilfeRLUmsG) was published on 29 June 2013 in the Federal Law Gazette. Most of the changes, among them changes to VAT law, will be effective the day after the Act has been published. Once more, taxable persons must react quickly and amend their invoice templates. Customers should carefully review incoming invoices, in order to ascertain that they are in line with the new invoicing rules in order to ensure input VAT deductions.
Regarding intra-Community supplies the German law allows certain alternative means of proof besides the entry certificate. These alternative means of proof are in the scope of the second part of our newsletter regarding the required proof for intra-Community supplies.