Tax & Legal

The Supreme Tax Court decided that a secondary (ancillary) activity to the holding and management of own property which is not expressly permitted by Section 9 No. 1 Sentence 2 Trade Tax Act (in the case in dispute: keeping classic cars for the purpose of appreciation of value), can also preclude an extended trade tax deduction even if no income is generated.

The supply of electricity to tenants is an independent main service and distinct from the otherwise tax-free rental, and the VAT from the purchase of the photovoltaic systems is deductible for the landlord as input VAT.

In a referral from Portugal the ECJ was asked on the VAT situation in case of the supply of a subscription gift of small value in the form of tablets or smartphones to new subscribers of consumer protection magazines. In its opinion, the ECJ saw the circumstances of the case to suggest that the provision of a subscription bonus is an ancillary service connected with a main service because the bonus was only granted to increase the number of subscribers to the magazines and thus contributed to improve the profit situation of the plaintiff.

Following a request for a preliminary ruling from the German Supreme Tax Court, the ECJ decided that the VAT exemption in connection with the letting of immovable property as provided in Article 135 of the VAT Directive may also apply to the letting of permanently installed equipment and machinery where that letting constitutes a supply ancillary to a principal supply of the lease of a building and if it constitutes from an economic point of view one single supply.

The Supreme Tax Court has held that hotel meals provided as part of a package are ancillary to the main service of an hotel of providing accommodation. Full-board and half-board packages are therefore taxable as accommodation.

The Supreme Tax Court has held that trade association seminars are, as such, VAT-free, although opulent meals in the interests of networking are not.