In a recent decision the Supreme Tax Court dealt with the provision of services by public bodies under German VAT law. If the economic activities of a public body are not outstanding and distinct from its overall activities it is not a taxable business for VAT and thus not eligible to deduct input VAT incurred on the underlying costs.
Tax & Legal
A company dealing in the field of electronic data processing served its competitors with prior written warnings due to violations of general business terms and conditions and received reimbursement of the expenses incurred. The tax office assumed a taxable service being subject to VAT. The Supreme Tax Court confirmed this view.
The Supreme Tax Court held that the commitment to enter a rental agreement is a VAT exempt service.
A mere put option by the lessor at a favorable price does not necessarily lead to the attribution of economic ownership of the assets to the lessee. In its judgment the Supreme Tax Court once more confirms that economic ownership must be determined on a case-by-case basis.
Profits arising from the sale of an interest in a partnership are not to be included in the extended trade tax deduction for real estate enterprises.
According to Section 9 no. 1 2nd Sentence of the Trade Tax Act (TTA), in place of the deduction under Section 9 No. 1 1st Sentence TTA (lump sum deduction of 1.2% of the assessed value of the real estate), enterprises, which exclusively manage and use their own real estate, may make an application to make an (extended) deduction relating to the part of the trading income which relates to the management and use of their own real estate.
Where a company, which has acquired investment units in US dollar denominated equity funds, writes down the value of the investment units to their fair market value following an unfavourable development in the foreign currency exchange rate, the company must add the write down back off-balance sheet.
In a decision published in March 2017 the Supreme Tax Court held that – in the case of a two-tier partnership structure – the interest expense of the Dutch partner holding only an indirect share in a German limited partnership is nevertheless tax deductible when computing his limited German tax liability resulting from his investment in the German partnership.
here an entrepreneur undertakes to enter into a tenancy (landlord and tenant) for a consideration, the supply is tax exempt according to Section 4 No. 8 (g) VAT Act.
There is no addback for trade tax purposes for amounts paid by a German company arranging for participation in foreign trade fairs on behalf of others.
The right to deduct input VAT may be excluded only in cases in which the goods acquired are used, to an extent greater than 90%, for purposes other than the taxable person’s business, and not where the goods are used for non-economic purposes (such as: in the course of public activities).