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VAT News 07/2022
Federal Ministry of Finance on the treatment of VAT in preliminary insolvency proceedings
Positioned at the interface between VAT and insolvency law, sec. 55 para 4 of the German Insolvency Statute (InsO) is of crucial importance to the tax authorities, in their capacity as insolvency creditors, when it comes to the successful recovery of a VAT claim (debts incumbent in the estate) or the loss of a claim (insolvency claim). The legislator has now amended sec. 55 para 4 of the German Insolvency Statute, effective as from 01.01.2021, and extended it to cases of preliminary debtor-in-possession-management. In its letter of 11.01.2022, the Federal Ministry of Finance has now commented on some controversial questions concerning the amended section.
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VAT News 06/2022
German Federal Ministry of Finance on the private use of electric/hybrid vehicles and bicycles
In a letter dated 7 February 2022, the German Federal Ministry of Finance comments, for the first time, on the VAT treatment of the increasingly popular use of electric vehicles and company bicycles. Fortunately, from now on, and for the past, the 1% regulation can also be applied to (electric) bicycles. However, the German Federal Ministry of Finance also clarifies that the various income tax benefits in this area do not apply to VAT. This means high administrative burdens for all entrepreneurs, who must determine different tax bases for income tax (especially wage tax) and VAT.
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VAT News 05/2022
ECJ: Input VAT deduction at the time of payment if supplier is subject to cash accounting scheme
According to Union law, the right to deduct input VAT arises when the deductible VAT becomes chargeable. In its recent ruling, the ECJ confirms this rule also for the case that the VAT becomes chargeable only upon receipt of payment due to the supplier calculating its VAT on the basis of the remuneration received (cash accounting scheme). The recipient can then deduct the input VAT only at the time of payment. This applies to all recipients, irrespective of how they calculate their VAT. In this respect, the German law and the current view of the tax authorities are contrary to Union law.
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