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22 July 2005
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Infringement proceedings on energy tax
The European Commission has sent a reasoned opinion (the second stage of infringement proceedings) to Germany over its failure to implement the Energy Taxation Directive (which introduced minimum tax rates on all energy products) until 1 January 2006 at the earliest rather than 31 December 2003 as required by the Directive.
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15 July 2005
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Possible VAT rate rise
We understand that there is a lot of speculation in Germany that the VAT rate will rise following the forthcoming general election – at least one party has stated that they will increase the VAT rate should they win.
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24 June 2005
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Case referred to the ECJ for a ruling re evidence to support zero rating
The German federal Tax court has referred a case to the ECJ. The case relates to the evidence required to support the zero rating of sales.
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10 June 2005
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Possible VAT rate rise
There have been rumours in a number of newspapers that following the general elections which are taking place in the Autumn in Germany the VAT rate may be increased.
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29 April 2005
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Private use of capital assets - annual VAT charge
The German courts have referred to the European Court of Justice a question on how a business should calculate the annual VAT charge it must pay when it puts a capital asset to private use. In particular, the European Court is asked to rule whether the charge should be based on depreciation and/or a percentage of the cost of the capital asset (in this case a building). The answer of the European Court will apply in all member States of the EU.
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1 April 2005
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Retrospective VAT claims on business entertainment
The German Supreme Court has recently held that the current German rules limiting the right to recover VAT on business meals to 80% up to 31 December 2003 and 70% thereafter are illegal under EU law. Although the case referred specifically to business meals it could extend to other types of business entertainment and businesses incurring such costs in Germany on which VAT recovery has been limited may be able to submit retrospective refund claims.
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18 March 2005
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VAT recovery on business entertainment expenses
A German court recently held that the rule restricting the right to recover VAT incurred on business meal expenses to 80% up to 31 December 2003 and 70% thereafter is not compatible with European law. The case is now on appeal to the Federal Tax Court.
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25 Feb 2005
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VAT treatment of slot machines outside licensed public casinos
The European Court of Justice has ruled in the case of Linneweber and Akritidis that Germany is wrong to subject gambling machines outside licensed casinos to VAT when gambling machines in licensed public casinos are exempt. The effect is that taxpayers in Germany who have been accounting for VAT on gambling machines outside licensed casinos can now make claims to recover that VAT.
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14 January 2005
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New restrictions on VAT exemption rules for loan intermediaries
The Ministry of Finance has confirmed the application of the BFH decision, which clarifies that for an intermediary finance service to be exempt, the intermediary must have direct contact with, and be remunerated by, one of the parties benefiting from their service. Accordingly, sub-intermediaries will no longer be treated as exempt.
The German authorities will not assess any taxpayer which has incorrectly treated its intermediary services as exempt prior to 1 July 2005.
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19 November 2004
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Mobile phone companies examine regulator's offer in 3G case
Global mobile phone companies have indicated that they will consider the offer by the telecomunications and postal service regulator to extend the limitation period for possible tax refunds in connection with the awarding of UMTS (3G) mobile licences. The regulator is aiming to prevent legal action from being brought against the German state and without an extension the operator would need to launch action shortly. The regulator does not expect the European court to accept the claims.
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24 September 2004
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Regions reject centralising tax collection
A total of 16 regions in Germany are against the idea of centralised tax collection. The three main taxes in the regions are corporation tax, income tax and VAT.
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17 September 2004
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Deutsche Post postal services remain VAT-free
The Government has decided that the postal services of Deutsche Post AG will remain VAT-free. It has rejected a guideline proposal of the European Commission for the abolition of the tax exemption for the postal company.
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18 June 2004
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More relaxed view on triangulation
The German authorities are to take a more relaxed view in relation to triangulation, which is a simplification procedure for the movement of goods from one EU country to another involving an intermediate supplier in (but no physical delivery of goods to) a third member state. The Germans are looking to extend the procedure to situations where more than 3 parties are involved.
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18 June 2004
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Stricter filing procedures for 8th and 13th Directive reclaims
A decision in the German courts has clarified the filing deadlines for documentation supporting 8th and 13th Directive reclaims. All documentation must be received by 30 June or the claim may be rejected.
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14 May 2004
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Disagreements over new VAT rate boils over
Chancellor Gerhard Schroder and the governing Social Democratic party leader Franz Mutefering, have rejected plans for a 5% VAT hike, as German public finances threaten to breach the eurozone 'Stability and Growth Pact'.
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7 May 2004
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Proposal to raise VAT to 21%
Gerhard Schroder, the German Chancellor has rejected a plan by the Finance Minister, to raise VAT from 16% to 21% and use the revenue to finance a drastic cut in non-wage labour costs. The plan is likely to spark strong reactions from coalition partners and opposition parties.
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23 April 2004
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Changes to VAT on airline and train tickets proposed
The German government has proposed increasing the VAT on airline tickets to destinations outside of Germany and increasing the VAT on train tickets, although it is not yet clear whether domestic train journeys or those to destinations outside Germany will be affected. The proposals are claimed to be included in legislation designed to reform Deutsche Bahn AG, the state-owned railway system.
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26 March 2004
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German Finance Minister rules out VAT rate increase.
The Finance Minister has denied reports that he will increase the VAT rate from 16% to at least 18%. Speculation over the rise has been fuelled by the threat of a budget shortfall in 2005.
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26 March 2004
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German builders concerned about new VAT provisions
German builders are concerned about new VAT regulations effective from the 1st April 2004. The new regulations exempt sub-contractors in the building industry from accounting for VAT on their turnover. Instead the company which awarded the contract will have to pay the VAT. The move is designed to help small and medium size construction companies. The building industry has expressed concerns that there are no transitional provisions and that such a radical VAT change could cause disruption in the industry.
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13 February 2004
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Important changes to VAT legislation
Germany has recently passed new legislation which includes the implementation of the EU Invoicing Directive, provisions relating to commissionaire structures, the creation of VAT warehouses and an extension of instances where customers can self-account for VAT on services received from abroad. Other changes have been made to the period of grace allowed for the filing and payments of VAT under provisional VAT returns and the VAT arrangement for the leasing of movable goods and the factoring of debts.
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27 June 2003
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Debt factoring held to be taxable
In the case of MKG-Kraftfahrzeuge-Factoring GmbH, the European Court of Justice (ECJ) has concluded that debt factoring is a business activity, and as a consequence a taxable activity, which does not fall within the exempted activities contained in the EU Sixth VAT Directive. The ECJ found that the service supplied by the factor constitutes that of relieving the client of the risk of non-payment by his debtors. The ECJ also found that there is no justification for differentiating between true factoring and factoring with recourse (where the risk is not fully transferred to the factor), as in both instances the supplies made by the factor to the client are of the same nature.
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25 April 2003
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VAT on flights, an update
A committee has been formed to discuss the possible introduction of VAT on international air travel. The different political parties and some local administrations have published suggested amendments to the proposal. This is thought to be the final round of discussions before a final announcement on the issue will be made. Surprisingly, it is reported that there has been little political or public opposition to the proposed introduction of VAT on international flights.
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25 April 2003
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Supplementary Budget
There may be a second Budget in Germany this year due to shortfalls in respect of tax receipts.
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18 April 2003
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Right to recover VAT without an invoice
The Federal Fiscal Court has referred the question of whether a taxpayer can recover VAT incurred on purchases without holding a valid VAT invoice to the ECJ. Under current German legislation, a taxpayer only has the right to recover VAT when he is in possession of a valid VAT invoice.
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21 March 2003
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VAT on flights rejected
The plans to introduce VAT on flights were approved by the Lower House of the German Parliament in February. However, the upper house voted on this issue on 14 March rejecting the proposed changes. It is now therefore unclear as to whether flights will be subject to VAT in the foreseeable future.
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7 February 2003
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VAT Rate
The lower house of the German parliament agreed a motion on 31 January 2003 to refuse any increase in the VAT rate from 16%.
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24 January 2001
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Government dismisses VAT refund on 3G licences
The German finance ministry has said it saw no grounds for claims for VAT rebates from companies that bought 3G licences for a total of EUR51 billion in 2000. The finance ministry was reacting to claims from at least two of the six 3G licence holders in Germany to be issued with official invoices for the licence fees, which would allow them to claim back billions of Euros in tax. The finance ministry said Germany's telecoms regulator believed that the grounds for levying VAT, set at 16 per cent in Germany, were not met.
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10 January 2001
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Proposed VAT amendments
The Federal Cabinet has approved a number of VAT changes to take effect from 1 April 2003. These include reducing the scope of the reduced rate of VAT, removing the zero-rating of cross-border passenger air-transport and treating mixed supplies of reduced-rated and standard-rated goods as a composite supply of standard-rated goods.
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