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VAT News 07/2025
Federal Ministry of Finance on educational services: focus on the Distance Learning Protection Act
The German Annual Tax Act 2024 has reformed the VAT exemption for educational services in accordance with sec. 4 no. 21 of the German VAT Act. This amendment took effect as of 1 January 2025. On 17 January 2025, the Federal Ministry of Finance published a draft of an application letter on the new legal regulation. This draft confirms the Ministry’s letter of 29 April 2024 and thus the VAT liability for many online educational offers. An exception to the VAT liability, in the digital education sector, is to apply to courses that are approved under the Distance Learning Protection Act. This is an issue that has been previously neglected but is now being given an unprecedented level of attention. As serious legal consequences may arise from non-compliance, affected course providers must urgently become familiar with this topic.
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VAT News 06/2025
Property acquirer not liable for unduly charged VAT in rental agreements
A property purchaser is not liable under sec. 14c of the German VAT Act for unduly charging VAT in any lease agreements he has taken over. This was decided by the Federal Fiscal Court in its judgement of 5 December 2024. Contracts can be regarded as invoices if they contain the invoice details required by the VAT law. This can result in unduly charged VAT as stipulated by sec. 14c para. 1 of the German VAT Act. The Federal Fiscal Court´s decision is to be welcomed, as it serves to limit further risk for property buyers. However, it remains to be seen what further effects the decision will have from the perspective of the seller and the tenant.
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VAT News 05/2025
Insolvency and VAT: Payment by a Third-Party Debtor as an Insolvency Claim
Special rules apply in preliminary insolvency proceedings. VAT Law is no exception. If an insolvency debtor receives consideration during the preliminary insolvency proceedings for supplies rendered prior to the beginning of the proceedings, this does not always mean that an estate liability is incurred (which is unfavourable for the insolvency administrator). No estate liability arises if the insolvency debtor’s receivable is discharged through payment by a third-party debtor without the consent or any other involvement on the part of the weak preliminary insolvency administrator. The Federal Fiscal Court confirmed this in its ruling of 29 August, 2024 (V R 17/23). In such cases, the tax office must register its VAT claim in the insolvency schedule.
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