In Germany, the activities of members of supervisory boards are generally subject to VAT. In its judgement in the Dutch case IO of 13.06.2019 (C-420/18), the ECJ decided otherwise. In this case, the ECJ denied the independence of a member of the supervisory board of a foundation. The ECJ ruled that a supervisory board member does not act in his own name, on his own account or on his own responsibility and is subordinate to the supervisory board itself. The individual member does not bear any economic risk associated with his activity. The individual powers of the members of German supervisory boards of stock corporations and cooperatives are already limited by law to a similar extent as referred to in the ECJ proceedings. The decision is therefore likely to result in the alteration of the taxation of German supervisory boards in terms of non-taxability. If the activity of the supervisory board member is not taxable, there is no right for VAT deduction. For the past, the clear guidelines of the German VAT circular should protect legitimate expectations. This is particularly important with regard to the deduction of the input VAT arising from purchases.
The so-called Quick Fixes will come into force on 01.01.2020 and will lead to some changes of the VAT laws in the EU member states. There are a number of questions in doubt in this regard. The EU Commission therefore considers it necessary to publish guidelines in order to ensure uniform application within the EU. It has now published initial thoughts on the subject and asked the Member States for further comments.
France has asked the European Commission's VAT Committee for an opinion on the VAT treatment of recharging electric vehicles (so-called "e-charging"). The VAT Committee will give its opinion on whether e-charging constitutes a single supply and whether it is to be qualified as a supply of services or as a supply of electricity and also whether the ECJ jurisprudence in Auto Lease Holland and Vega International could be applicable to supplies made by EMPs. Once the opinion of the VAT Committee is published, conclusions could also be drawn as to how the supplies of entrepreneurs with a comparable business, such as fuel card issuers, are to be treated from a VAT perspective.
In its letter of 27.05.2019, the Federal Ministry of Finance comments on the VAT treatment of prize money and restricts the scope of the application of the principles established by the ECJ in the Baštová case. It is necessary to make a clear distinction between placement-dependent and placement-independent prize money. Hence, participants in such competitions are required to make a split of the prize money in future.
On 15 May 2019, the European Court of Justice published a ruling in the case of Vega International. This case is likely to, once again, create considerable uncertainty regarding the VAT treatment of fuel supplies carried out using fuel cards. The uncertainty arising from the ECJ ruling in the case Auto Lease Holland in 2003 has thus been revived. The ECJ has reclassified the supplies and now regards this form of transaction as a granting of credit instead of a supply of goods. Not only oil companies, fuel card issuers and their customers, such as logistics and leasing companies, are affected. Companies active in the loading of electric vehicles and in other comparable business models must now also consider what this new ECJ judgement means for them.
Warnings issued pursuant to copyright law are subject to VAT. This was decided by the Federal Fiscal Court in its decision of 13.02.2019 - XI R 1/17. The Court found that a warning given by a copyright holder to an infringer constitutes a taxable supply. In the Federal Fiscal Court’s view, a supply exists in the fact that the warning party gives the warned party the opportunity to avoid a legal dispute. The amount of reimbursement paid by the warned party is the remuneration for the supply. The decision raises follow-up questions. It is also important for other areas of intellectual property, e.g. trademark law.
According to the German tax courts, swimming lessons have, at least to date, undoubtedly fallen within the scope of the Union law VAT exemption as constituting part of “school and university tuition”. The ECJ, however, recently restricted the VAT exemption for the commercial supply of tuition services by defining the term “tuition” much more narrowly. This case law has now led to the Federal Fiscal Court raising doubts and referring three questions to the ECJ. The referral shows that the VAT exemption for the supply of commercial tuition services can currently not be determined with any significant degree of legal certainty.
On 24.04.2019, the European Commission presented a proposal for a new VAT exemption. In addition to the VAT exemptions for NATO troops, a VAT exemption for supplies of goods and services to armed forces of other EU states will, in the future, also apply. A prerequisite for the application of the exemption is that the troops serve the common defence effort. For this reason, Articles 22, 143 and 151 of the VAT Directive are to be amended. The draft requires Member States to implement the amendments by 31.06.2022, at the latest.
HMRC intends to strictly implement the correct treatment of input tax deduction of import VAT in the UK: In its letter of 11.04.2019, HMRC points out the current incorrect practice whereby import VAT is often claimed as input tax by non-owners of imported goods. By referencing the example of toll operators, among other taxpayers, HMRC explains how the procedure should be handled correctly. Taxpayers should review their business processes in connection with imports to the UK and adjust them, if necessary.
VAT exemption for the supply of commercial education services was recently limited by the ECJ judgment in A & G Fahrschul-Akademie (C-449/17). In doing so, the ECJ defined a new, narrower term for “tuition” than that previously in use. The Federal Fiscal Court did not raise this issue in its most recent decision in this area. Notwithstanding this, however, it assesses the requirements for VAT exempt commercial education and training more strictly than before. According to its standards, the exemption of tango dancing lessons is only possible where a concrete professional relation exists. Due to this deviation from how the ECJ defines the term tuition, the decision is significant for all suppliers of commercial educational services.