In its letter dated 13 February 2024, the Federal Ministry of Finance (BMF) comments on the topic of input VAT apportionment in the case of mixed use of procured supplies. This topic is of crucial practical relevance and, at the same time, is often the subject of controversial discussions, especially in the course of VAT audits carried out by the tax authorities. In particular, the letter comments on the relationship between a total turnover-based allocation key and other apportionment methods. The BMF also explains how the total turnover-based allocation key is to be calculated. Essentially, these are clarifications, rather than groundbreaking innovations.

The jurisprudence of the ECJ and the German Federal Fiscal Court has provided hope of input VAT deduction in the construction of so-called development facilities. Now the German tax authorities have reacted with a Federal Ministry of Finance letter and largely dashed these hopes. There are strong arguments supporting the assertion that the tax authorities are in the wrong.

The device bonus paid by a mobile service provider to an intermediary may constitute third party consideration for the supply of a mobile phone. The German Federal Fiscal Court previously stated this in its 2013 judgment in “Gratis-Handy (free mobile phone)” and the tax authorities subsequently adopted this view. In its letter dated 23 January 2024, the German Federal Ministry of Finance has now clarified that a contractual decoupling precludes consideration paid by a third party.