In a letter dated 1 December 2021, the German Federal Ministry of Finance adopts the principles of the business-friendly judgment of the German Federal Fiscal Court for the purposes of the "customary trade description" in invoices. Henceforth: What is usually accepted among merchants as a description of goods and services rendered is sufficient for the purposes of input VAT deduction as regards the customary commercial description of what was supplied. This simplification applies equally to all traders. However, the taxpayer bears the burden of proof as to what is considered customary. Proper invoices thus remain a frequent target of the tax authorities when it comes to VAT.
The Federal Ministry of Finance's letter on the VAT exemption for cost sharing groups, in accordance with sec. 4 no. 29 of the German VAT Act, is finally coming. Although it is still a draft letter, the Federal Ministry of Finance seems to be in the mood for Christmas. The Federal Ministry of Finance’s current point of view gives hope that at least some forms of cooperation will, in future, be able to take place without additional VAT charges. This applies, in particular, to groups of public bodies and non-profit institutions.
The coalition agreement has been sealed. The new federal government has made a real effort to modernise VAT (e-invoicing, reverse charge and import VAT) and, at the same time, to support activities for the common good (in-kind donations, supplies of educational services, inclusive businesses). It is just a pity that the long-awaited reform of the VAT group cannot be expected any time soon. However, we will keep trying.
The ECJ (case C-324/20) has ruled that, in the case of an instalment payment extending over five years, the respective VAT is chargeable at the time the supply of service is rendered. This decision differs from that made by the ECJ in the case of a player’s agent who was paid over three years for a supply of agency business services to a football club. However, the ECJ did not specify clear criteria for demarcation in this respect. In practice, it is recommended that full VAT be claimed from taxable persons entitled to input VAT deduction at the very outset of an instalment payment agreement.
In its recent decision of 21.10.2021 – C-80/20, Wilo Salmson, the ECJ clarifies that a taxable person must have an invoice in order to claim an input VAT refund. However, the court also makes it clear that the concept of an invoice is to be understood very broadly. The ECJ distances itself, consciously or not, from the minimum mandatory information for the acceptance of an invoice entitling the recipient of a supply to deduct input VAT as laid down by the German Federal Fiscal Court (most recently in the ruling of 12.03.2020 - V R 48/1) and the German Ministry of Finance (letter of 18.09.2020).
The German Ministry of Finance (BMF) recently provided a draft of a BMF Circular entitled “VAT assessment of transactions in the fuel card business” to industry associations with a request for comments to be provided by 4 November 2021. The BMF Circular is intended to take effect as early as 01.01.2022. If it comes into force in the currently planned version, the BMF will overturn the customary structure of fuel card transactions and follow the ECJ in the Vega International case: fuel card transactions will generally be considered credit services. This results in an urgent need for action for all parties involved.
For a long time, it has remained unclear, from a VAT perspective, as to how the funds collected by the collecting societies and then distributed to the publishers (so-called publisher’s share) is to be treated. The Federal Ministry of Finance’s letter of 14 October 2021 now provides clarity. Under certain circumstances, there may exist supplies of services, subject to VAT, between collecting societies and publishers.
In the legal case Dubrovin & Tröger GbR - Aquatics (C-373/19), the ECJ denied the VAT exemption for swimming lessons and thus confirmed its new definition of "school and university education". According to these standards, the scope of application of the VAT exemptions for educational services is considerably limited. As a result, part of the fiscal court case law will probably become obsolete quite soon. All education providers are affected by the decision and should now question the VAT assessment of their courses and events.
In practice, a number of VAT problems are associated with the development of charging infrastructure. The European Commission's VAT Committee has now once again addressed this issue. However, many relevant questions (e.g. on fuel cards or provision of electricity free of charge in the retail sector) remain unanswered, all resulting in the persistence of legal uncertainty in many areas of application.
Warning notices issued from 01.11.2021 onwards are subject to VAT. This is stated in the German Federal Ministry of Finance’s (BMF) recent letter dated 01.10.2021. In its 2016 decision (XI R 27/14) and its 2019 decision (XI R 1/17), the German Federal Fiscal Court assumed that a person issuing a warning notice provides a supply of services to the person being warned that is subject to VAT. The BMF now agrees with this view. For warning notices issued before 01.11.2021, the BMF letter contains a non-objection provision. Those issuing warning notices and their advisors must be prepared for this new administrative practice.