In the ninth part of our KMLZ Newsletter series on the Annual Tax Act 2020 we present the innovations concerning the VAT exemptions for supplies to the armed forces. In its currently valid version, the VAT Act provides for VAT exemptions for supplies rendered to NATO troops in accordance with sec. 4 no. 7 letters a and b of the German VAT Act. In addition, there is also a VAT exemption based on the NATO Status of Forces Agreement, which is independent of the VAT Act. A VAT exemption for troops of EU Member States and military EU missions has not previously existed.
In the eigth part of our KMLZ newsletter series on the Annual VAT Act 2020 we comment on the extension of the OSS-procedure applicable for all supply of services to non-taxable persons. In particular we explain the effect of OSS to cross-border passenger transportation services and other changes in this context. The simplification rules, as laid down in sec. 5 of the German VAT Implementation Code, are to be abolished. Consequently, as of 1 January 2021, short distances of up to 10 kilometers travelled in Germany will be subject to German VAT. This will result in an additional administrative burden being placed on providers of cross-border passenger transportation.
This is the 7th part of our Newsletter series on the Annual Tax Act 2020. Today, we will focus on the legislator’s intended implementation of a so-called decentralised taxation procedure for federal and state authorities. The tax authorities already allow individual dependent organisational units of the federal and state governments to be treated as taxable persons. However, a legal basis for this does not yet exist. Such a legal basis is now to be established, so that the individual organisational units may exercise all rights and obligations under VAT law after the option period has expired. This represents a simplification. However, many questions remain open.
The sixth part of our newsletter series on the Annual Tax Act 2020 deals with the changes regarding the healthcare, nursing care and social services sector. The legislator is further aligning the German VAT law in this sector to European law. The draft of the Annual Tax Act 2020 provides for a number of selective extensions of the corresponding VAT exemptions. In particular, the assessment of the 25 % threshold, provided for in the residual provision of sec. 4 no. 16 German VAT Act, is to be adjusted. Furthermore, the legislator wants to clarify, that short-term room rentals by student unions to students are VAT-exempt.
In the fifth part of our newsletter series, we explain the reorganisation of MOSS in the Annual Tax Act 2020. The MOSS procedure will be replaced by the OSS procedure. The requirement that taxable persons using the OSS procedure must do so consistently throughout the EU will probably mean that it will not be applicable for many. The scheme will not benefit those persons using fulfilment solutions.
In the fourth part of our newsletter series, we take a closer look at the implementation of the e-commerce package in the Annual Tax Act 2020. The draft law contains new regulations for distance sellers. A uniform and low threshold now applies to intra-EU distance sales. However, the changes will only make life easier for a certain category of distance sellers. For those with fulfilment center structures, new registration obligations in other EU countries will probably arise.
The third part of our newsletter series on the Annual Tax Act 2020 deals with the special regulation for the import of consignments with a maximum value of EUR 150. For such low value consignments, which are to be delivered directly from the third country to customers in the country of import, the presenting service providers will, in future, be able to carry out the import on behalf of and for the account of the recipient and also pay import VAT on their behalf. However, according to sec. 21a of the German VAT Act (draft), an application by the service provider is required for this purpose.
In the second part of our small series we are examining the implementation of the E-Commerce Package in the Annual Tax Act 2020. The draft bill contains significant changes for electronic interfaces (in particular online marketplaces). In certain cases, a deemed chain transaction according to sec. 3 para. 3a of the German VAT Act (draft), between an online trader, an electronic interface (e.g. online marketplace) and an end customer. The electronic interface (e.g. online marketplace) thus becomes liable for VAT.
The German Federal Ministry of Finance has published the draft bill for an Annual Tax Law 2020. Extensive changes are planned in the area of VAT. In a small series, we will take up and examine one topic each day over the next few weeks. In this newsletter we will first give a general overview of the planned changes and when they could come into force.
In practice, the distinction between payment for damages and remuneration for a supply plays a recurring role. The ECJ recently ruled on this question in the case of Vodafone Portugal. In this ruling, the ECJ found that amounts paid by customers to their contractual partners in the event of premature termination of a contract, are subject to VAT. This ruling is significant for all companies which conclude contracts with a predetermined minimum period. However, as the German VAT Circular has, so far, taken a different view, the decision is likely to only have implications for the future.