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The apportionment of input VAT deduction for mixed-use buildings has repeatedly been the subject of fiscal court proceedings. The German Federal Fiscal Court now states: The taxpayer is not bound to the proportion chosen if it transpires later that it is not appropriate. The taxpayer therefore has a de facto right of choice in these circumstances. The burden of proof as to whether the proportion according to the square footage is more accurate than the allocation according to the turnover lies with the tax office. In the case of significant differences in the equipment of mixed-use buildings, the input VAT is to be allocated according to the (object-related) proportion of the turnover.
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Can input VAT deduction be achieved by means of a so-called upstream holding company? This question was referred to the ECJ by the XI. Senate of the Federal Fiscal Court with its decision of 23 September 2020 (XI R 22/18). The Federal Fiscal Court would answer in the negative as it recognises a link to the VAT exempt activities of the subsidiary. Further, it referred the question to the ECJ of whether an abusive structure is involved in such instances.
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According to the German Federal Ministry of Finance, businesses not resident in the EU will no longer be able to apply the Tour Operator Margin Scheme as from the start of 2021. If non-EU businesses organise trips to Germany, this may now result in a German VAT liability. On the other hand, input VAT from related input services can now be claimed. Those companies impacted by the changes should now check to ascertain the extent to which they are affected and determine whether they should restructure their business processes in order to avoid the associated disadvantages or to benefit from the advantages.
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