One week after the German Bundestag, the German Bundesrat has now also voted, in today’s session, on the temporary reduction of VAT on supplies of gas and district heating. With retroactive effect as from 1 October 2022, extending to 31 March 2024, a VAT rate of 7%, instead of 19%, will be applied. This will result in major problems for those gas and heat suppliers affected by it. In response to this issue, the Federal Ministry of Finance published a draft letter on its website on 22 September 2022. This draft letter currently only takes into account supplies of natural gas. Nevertheless, an update is expected shortly regarding district heating. Our KMLZ VAT newsletter provides you with an initial overview of these changes.

The German Federal Fiscal Court recently decided that the provision of a company car constitutes a barter-like transaction. It convincingly explains why the ECJ judgment of 20 January 2021 (C-288/19) has not resulted in the German practice of company car taxation being turned upside down.

Despite the continued existence of doubt from the perspective of Union law, the German Federal Fiscal Court has, once again, ruled that sister companies cannot form a VAT group. In its judgment, the Court also commented on economic links through the letting of office space. Since both of these abovementioned aspects frequently exist in practice in groups and in smaller company structures, the relevance of this judgment extends beyond the individual case.