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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.
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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.
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A holding company claimed input VAT deduction from procured services, which services it passed on as a contribution in kind to its subsidiary. Due to the fact that the subsidiary only rendered VAT exempt supplies, a successful claim would have resulted in an expansion of the possibilities for input VAT deduction. In its judgment of 8 September 2022 (Case C-98/21), the ECJ upheld the doubts of the Federal Fiscal Court. The holding company was found not to be entitled to input VAT deduction.
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