According to a recently published decision of the Supreme Tax Court a so called “fairness compensation” which is paid by a TV station to the screenwriter based on the specific provisions in the German Copyright Act is subject to VAT as remuneration from a third party within the meaning of Section 10 (1) sentence 3 of the German VAT Act.
In a most recent ruling, the European Court of Justice (ECJ) held that, for situations where the output VAT is calculated at the time the remuneration is received rather when the service was completed, the German VAT provision that the right to deduct input VAT must be exercised upon completion of the supply or service is not in line with current EU law, in particular Articles 167 and 66 (1) of Council Directive 2006/112/EC.
