In the EU Commission’s view, the existing corporate tax law has failed when it comes to the taxation of revenue generated by the digital economy. An interim tax of 3% on specific online revenues should be levied until the OECD has remedied the situation. Companies with a world-wide revenue exceeding EUR 750 million would be affected. The placing of online advertising, the facilitation of online sales portals and the sale of user data would all be taxed. Thus, the digital service tax would be focused on the USA’s internet giants.
The ECJ repeated in its Biosafe decision (judgment of 12.04.2018 – C-8/17), the reasoning contained in the case Volkswagen AG, namely that a national regulation, regarding a limitation period is not applicable in certain circumstances. Whereas the case Volkswagen AG considered an input VAT refund claim according to Directive 2008/9/EU, the case Biosafe concerned the regular taxation procedure. This decision may also have an impact on the German regulation regarding the Statute of Limitations, sec. 169 ff. German General Fiscal Code.
Member States must pay the total amount of the reim-bursement interest regulated in their legislation. In the view of the European Court of Justice, this also applies if the interest is higher in a particular case than the actual financial disadvantage suffered by the taxpayer (judgment of 28 February 2018 – C-387/16 – Nidera). This decision may impact on the discussion concerning the lawfulness of the German interest on arrears (6% p.a.).
Where a taxable person subsequently invoices VAT in invoices for supplies, which previously he had treated as being VAT exempt, this does not result in the recipient’s input VAT deduction, by means of a VAT refund, being disallowed. Any possible limitation periods are irrelevant in cases where the recipient was unable to claim the refund within time, due to the fact that he did not have an invoice and was unaware of the VAT liability (ECJ, decision of 21.03.2018 - C- 533/16 Volkswagen AG). Here, substantive law prevails over procedural law.
AUSTRALIA introduces distance sales regime +++ BULGARIA clarifies treatment of supplies via consignment stocks +++ FRANCE reduces interest rates for tax arrears +++ GREAT BRITAIN defers Brexit and demands electronic transfer of VAT details +++ ITALY obliges companies to invoice electronically and eases regulations regarding input VAT deduction +++ SWITZERLAND obliges registered companies to declare worldwide turnover and shifts to electronic customs assessments
Unusual constellation – the plaintiff, a taxable person, assumed that it would be liable for undue VAT shown on debit notes. The tax office, however, denied the VAT liability. The Tax Court of Baden-Wurttemberg agreed with the plaintiff (see decision of 11.12.2017 file ref. 9 K 2646/16). It granted approval to cancel the undue VAT shown in the debit notes, a prerequisite for claiming the VAT amount from the tax office. The decision creates significant uncertainty for other taxable persons.
On 27.02.2018 the German Ministry of Finance issued its very first notification regarding the VAT treatment of Bitcoin. Accordingly, the use of Bitcoin is to be treated the same as traditional currencies. Payments with Bitcoin are therefore not taxable. The exchange of Bitcoin into traditional currencies is tax exempt. However, VAT risks arise for online platforms, which allow virtual currencies to be traded via their platform. The tax exemption does not apply to the services provided by the platform. Additional VAT payments might be due.
According to the Federal Fiscal Court, a fixed interest charge of 6% per annum on tax arrears does not violate the general principle of equal treatment or the prohibition of excessiveness. Following sec 233a and sec 238 German Federal Fiscal Code, interest is due if a tax assessment leads to a subsequent payment in respect of an earlier tax assessment. Nevertheless, there is hope: The decision was applied to income tax in 2013. As VAT is based on European law, different stipulations could be applicable to it.
As from 01.01.2018, the new version of sec 4 no 8 lit. h of the German VAT Act applies to the VAT exemption for the management of investment funds. According to this new legal position, the scope of the VAT exemption is broader than it has previously been. In particular, the management of AIFs could be subject to changes. The precise limits are, however, currently unclear. Investment fund managers should keep an eye on the implications of the broader VAT exemption on their input VAT deduction.
To date, it has not been possible to ascribe the transport in a chain transaction in a legally watertight way Hence, the ECJ`s decision in the case Kreuzmayr (C-628/16) has been eagerly awaited. In its decision, the ECJ confirmed that the purchaser’s subjective knowledge (provided that it is supported by objective evidence) must be taken into account but not only that of the supplier. Any stated intention made by an intermediary operator as regards a further sale is therefore irrelevant, even if it could have been assumed following the ECJ decision in the case Toridas (C-68/16). Further, the ECJ denies protection of legitimate expectations where a chain transaction was wrongly evaluated.