Tax & Legal

In a recently published decision, the Supreme Tax Court confirmed its earlier judgment in the case of decentralized use of energy: The electricity generated in a combined heat and power plant (CHP) which is consumed locally by the operator of the plant (decentralized use) cannot be considered as a taxable supply to the electricity network operator nor as a subsequent return delivery (re-delivery) to the plant operator.

The European Court of Justice (ECJ) held that the supply of heat by a homeowners' association to its members, the residential property owners, is subject to VAT. Accordingly, the proportionate input VAT allocable to the acquisition and operation costs of the heat generating power plant will be deductible. The case was referred to the ECJ by the Lower Tax Court of Baden-Wuerttemberg.