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VAT News 04/2022
ECJ: Penalties for conduct in breach of contract subject to VAT?
The demarcation between compensation for damages and consideration for supplies rendered, has been an ongoing issue in daily practice. According to sec. 1.3 para. 3 of the German VAT Circular, contractual penalties, inter alia, are deemed to be compensation for damages rather than consideration for supplies. The ECJ is now narrowing this view. In its judgment of 20 January 2022, (C-90/20 – Apcoa Parking Danmark A/S), it ruled on a case concerning the use of a private sector parking space. If a motorist violates the general conditions of use when using a parking space and, as a result, is required to pay an (additional) amount of money, the ECJ considers this to constitute consideration for a supply of service, subject to VAT, for the specific use of the parking space.
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VAT News 03/2022
The German VAT group is tottering … – but will it fall?
Two cases have been referred to the ECJ and are currently pending in which the ECJ has to decide on questions concerning the German VAT group. The core issue in both proceedings is whether the controlling company - as provided for by German law - can be the taxable person and thus the person liable for payment of VAT. In her current Opinion on the proceedings, the ECJ’s Advocate General Medina assumes that German law is contrary to Union law as regards this issue. However, she goes one step further: she seems to consider that (contrary to the previous unanimous opinion) internal transactions within the VAT group are taxable.
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VAT News 02/2022
Pleasing clarification from the Federal Ministry of Finance on weight accounts
The Federal Ministry of Finance has offered welcome clarification concerning transactions in connection with weight accounts. The qualification as a “supply of goods” or “supply of services” depends upon the underlying transaction agreements. The Federal Ministry of Finance has also provided the practice with indications as to when a taxable supply of goods, a taxable supply of services or no taxable supply at all is to be assumed.
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