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VAT News 02/2020
For years, the parties involved have been struggling with the legal structure of Brexit. This week, following the approval of the British House of Commons, the House of Lords and also the Queen approved the Withdrawal Agreement negotiated with the EU. The Agreement’s entry into force on 01.02.2020 is thus quasi sealed. The so-called hard Brexit should therefore be averted. In our latest Newsletter, we summarise for you what is actually going to happen on 01.02.2020 and set out which legal regulations in the field of customs and VAT law will, in the very near future, apply between the UK and the EU.
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In two judgments (Ref: XI R 2/18 and XI R 28/18), the Federal Fiscal Court decided, in a business-friendly manner, on the "customary description" in terms of invoices. To date, the fiscal authorities and fiscal courts have always required that the description must allow for individual identification of the goods or services rendered, especially in the low-price segment. However, invoices often show only a category of what was supplied. The Federal Fiscal Court has now clarified that the customary character of the description is based on the commercial practice of billing. Entrepreneurs can henceforth invoke the commercial custom of the description used and thus secure the input VAT deduction.
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Under what circumstances does the reduced VAT rate apply to workshops for disabled persons and integration companies? With its decision of 23.07.2019 (ref. XI R 2/17), the Federal Fiscal Court demonstrates its intention to allow only a very restrictive application of the reduced VAT rate. It ignores both how these non-profit organizations work and that the pursuit of social purposes is privileged in accordance with Union law.
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