Latest VAT News - Forvis Mazars

Apartment rental with parking space is generally VAT exempt overall - BFH-ruling V R 41/19

In its ruling of 10 December 2020 (V R 41/19), unofficially published on 10 June 2021, the BFH (German Federal Court of Finance) ruled that if the landlord of apartments also rents out car parking spaces located in the same building complex, this is an ancillary service to the apartment rental and thus exempt from VAT. In doing so, it rejected the contrary view of the Thuringian Fiscal Court, which had unsettled the real estate industry in 2019. The Thuringia Fiscal Court wanted to interpret the term "building complex" more narrowly and attach further conditions to the uniform service.

Conclusions from a 2019 ECJ ruling on event admission entitlement to taxable persons - BMF circular letter dated 9 June 2021

In a letter dated 9 June 2021, the BMF amends the administrative guidelines for the German VAT Code on event services to taxable persons pursuant to Sec. 3a Subsec. 3 No. 5 of the German VAT Code. For these services to be taxable at the event location according to this special regulation, they now no longer have to be accessible to the general public. In doing so, the BMF intends to implement the ECJ ruling in the "Srf konsulterna AB" case of 13 March 2019 (C-647/17). It also clarifies that online seminars are not covered by Sec. 3a Subsec. 3 No. 5 of the German VAT Code.

Verlängerung der Verjährungsfrist für Steuerhinterziehung - Gesetzesänderung zum 1. Januar 2021

Der Gesetzgeber hat zum 1. Januar 2021 die Verjährungsfrist für Steuerstraftaten in besonders schweren Fällen von zehn auf fünfzehn Jahre verlängert. Bei strafbefreienden Selbstanzeigen und Nacherklärungen, die strafbefreiende Wirkung entfalten sollen, verlängert sich dadurch der Berichtigungszeitraum. Die Änderung hat mittelbar auch Auswirkungen auf die steuerliche Festsetzungsverjährung.

No reverse charge for the mere supply of goods assembled on-site - BMF circular letter dated 1 October 2020

Under German VAT law, there are two types of supplies involving the provision of goods with installation, and each has its own VAT regulations. One type of supply involves the provision of assembled goods and the other involves the provision of work supplies. These differences are, in reality, often overlooked.The BMF (Germany’s Federal Ministry of Finance) has clarified this important distinction in the administrative guidelines with a circular letter dated 1 October 2020. As of 1 January 2021, treating supplies of assembled goods as work supplies is no longer be tolerated.

Expansion of municipal roads - BFH-ruling "Mitteldeutsche Hartsteinindustrie" (XI R 26/29)

In its judgement of 16 December 2020 (XI R 26/20) in the "Mitteldeutsche Hartstein-Industrie" case, Germany’s Federal Court of Finance (Bundesfinanzhof, BFH) ruled that services performed in association with the unremunerated expansion of a public road by an entrepreneur entitle the entrepreneur to take input VAT deductions insofar as these are necessary for the company’s operation and that the benefit to the general public is, at most, incidental. A VAT-taxable free of charge supply does not exist if there is no threat of an untaxed end use. The BFH thus amends its case law, which previously denied the input VAT deduction.

Webinar- Untangling the EU VAT e-commerce package: prepare your strategy now

10 June | 16:00 – 18:00 CET

The e-commerce sector has been growing rapidly in the last few years, entirely changing the way business is transacted. This growth comes with new rules and regulations, including the new VAT rules for online cross-border sales of goods and services. Set to come into effect on 1 July 2021, these new rules have the purpose of strengthening the European internal market and ensure fair competition with non-European trader

Reverse charge mechanism even if only one of several service recipients is an VAT taxable person - BFH-ruling V R 7/20

In its judgement dated 10 December 2020 (V R 7/20) and published on 20 May 2021, the BFH (Germany’s Federal Finance Court) decided that the reverse charge mechanism also applies if only one of several recipients of the same service is a VAT taxable person. The challenge in this particular case was first to determine who was the actual beneficiary: two individual people or a company. The case illustrates the importance of preparing a well-structured contract.

Article 3 of the Third Coronavirus Tax Relief Act – lower VAT rate for restaurant services has been extended

The German parliament, with the consent of the Federal Council, has passed the 3rd Act on the Implementation of Tax Relief Measures to combat the effects of the COVID-19 crisis (Third Coronavirus Tax Relief Act dated 10 March 2021). Article 3 extends the measures that apply a reduced VAT rate of seven per cent to restaurant and catering services (excluding the supply of beverages) from the 30 June 2021 deadline until 31 December 2022.

Strict stance on input VAT deduction in tax evasion cases - ECJ-ruling "HR" (C-108/20)

The fact that the deduction of input VAT can be denied if the taxable person is involved in tax evasion is not new. However, in its decision of 14 April 2021 (C-108/20 involving the "HR" case), the ECJ (European Court of Justice) once again emphasizes that a mere "should have known" with regard to tax evasion is sufficient at a preliminary stage. This ruling means that taxable persons have considerable due diligence obligations.

Germany’s federal government puts application for VAT grouping on the agenda - package of measures to reduce bureaucracy

The German government plans to introduce 22 measures to reduce bureaucracy. Following the federal and state working group’s completion of the preliminary work, a process will be introduced according to which a VAT group does, if possible, not come into force without an application and a conformation from the tax authorities that the legal criteria are met.