In a recent ruling the German Fiscal Court did not recognize a retroactive invoice correction, as the tax statement on the particular invoices was materially incorrect. This raises many questions, since according to the previous opinion of the courts and the tax authorities, only an indeterminate, incomplete or obviously incorrect statement on an invoice was considered harmful. In the present case, however, the VAT indication was incorrect merely because of an incorrect legal assessment. Therefore, it is very surprising that the court did not refer the case to the ECJ.

With the letter, dated 20 October 2022, the Federal Ministry of Finance has implemented the long standing Federal Fiscal Court case law regarding the determination of input VAT apportionment pursuant to Section 15 (4) of the German VAT Act for mixed-used properties. With its letter, the Federal Ministry of Finance binds the tax administration to the interpretation of the Federal Fiscal Court in conformity with the VAT Directive and ECJ case law. This is an important step. The input VAT must be apportioned based on an appropriate apportionment formula, which will be determined and selected by the taxpayer. The tax authorities can only check whether the method is suitable.

The concept of the “granting of credit” is to be interpreted broadly for the purposes of VAT exemption. This is confirmed by the ECJ in its judgment on the VAT exemption of sub-participations in loan receivables. Despite the special nature of the underlying particular financial instrument, the ECJ assumes a pleasingly clear position with its general statements on the requirements for the VAT exempt granting of credit and continues to develop the broad interpretation manifested in its previous jurisprudence.