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Umsatzsteuer Newsletter 16/2020
COVID-19: Reduced VAT Rate for the Restaurant Industry / Extension of the Transitional Period for sec 2b for the Public Sector
By means of the Corona Tax Subsidy Act, the legislator intends to relieve the restaurant industry and the public sector from the burden of VAT. To this end, the reduced VAT rate of 7 % is to be applied to the supply of restaurant and catering services provided in the period from 1 July 2020 to 30 June 2021. The transitional period in accordance with sec. 27 para. 22 of the German VAT Act for legal entities under public law as regards the application of sec. 2b of the German VAT Act will be extended by a further two years until 31 December 2022.
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Umsatzsteuer Newsletter 15/2020
Powder keg VAT group: ECJ decides on a billion-euro budget gap
The German Federal Fiscal Court has referred a case to the ECJ that overshadows all previous cases. It raises the fundamental question of whether the national legal institution of the VAT group is compatible with Union law. The ECJ's judgment may result in all previous VAT returns of controlling companies being deemed incorrect. Requests for correction would be possible within the limitation period. As a result, a billion euro budget gap would become apparent. The Federal Fiscal Court is clearly in favour of the introduction of group taxation. The legislator will now have to act quickly.
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Umsatzsteuer Newsletter 14/2020
Federal Fiscal Court rejects special calculation of the deductible proportion of input VAT used by credit institutions (Philipowski method)
A number of credit institutions calculate their deductible proportion of input VAT using the so-called Philipowski method. Recently, the Munich Tax Court found this method of calculating the deductible proportion of input VAT not to be appropriate. The Federal Fiscal Court has now confirmed this decision. Nevertheless, the following still applies: Every taxable person with partly taxable and partly VAT exempt output transactions can estimate its own deductible proportion of input VAT. If this estimate is appropriate, the tax authorities must accept it.
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