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Tax & Legal

Tax & Legal

VAT: No permanent establishment in case of property rental


The European Court of Justice (ECJ) ruled that the reverse charge is applicable to the leasing of real property located in Austria because the Jersey based lessor, in lieu of own local staff to perform services relating to the letting, does not have a permanent establishment (fixed place of business) in Austria. Continue reading

ECJ: Participation in VAT fraud and refusal of input VAT deduction


The right to deduct input VAT is denied not only if the taxable person himself commits an evasion, but also if he is aware that he participated with his acquisition in a tax evasion. In the latter case the refusal of the input tax deduction is a consequence of the failure to comply with the responsibilities in suspect cases. The taxable person who knew or should have known that he or she was participating in a fraudulent transaction assists the perpetrators of that fraud and becomes an accomplice thereto. The European Court of Justice (ECJ) confirms its previous case law on this issue. Continue reading

VAT group: ECJ defines eligibility of partnerships as controlled companies


The ECI held that it is from the outset not compatible with EU-Law if the possibility for a partnership to form a VAT group – in addition to the controlling company – is limited to those partners in the partnership whose business is financially integrated into that of the parent. Such a restriction can only be justified by a specific need to prevent abuse. Continue reading

Swedish interest deduction rule incompatible with EU law


In a recent judgement the European Court of Justice (ECJ) has clarified that it is contrary to the freedom of establishment to deny the deduction of interest costs on a loan from a normally taxed group company, if this would not have happened had the loan been granted from a normally taxed Swedish group company instead. Continue reading

ECJ: Request for VAT refund valid even in absence of serial number


Following on a request for a preliminary ruling brought by the Supreme Tax Court, the European Court of Justice held that the application form for a VAT refund does not necessarily have to show a serial invoice number. It is sufficient to indicate another number which can be used to identify the invoice and thus the item or service in question. Continue reading

No VAT exemption for heat supplies provided by homeowners’ association


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. Continue reading

ECJ: No automatic VAT-exemption for sports related services of non-profit organizations


The ECJ held that Article 132(1)(m) of Council Directive 2006/112/EC exempting ‘the supply of certain services closely linked to the practice of sport or physical education’ is not being of direct effect and cannot be directly invoked before the national (local) courts. It is for the national court to determine in detail what kind of services provided by sports clubs are exempt from VAT. Continue reading

ECJ: Complaint for rejection of VAT refund applications by foreign companies upheld


The European Court of Justice (ECJ) upheld an action for breach of contract brought by the EU Commission against Germany in two of three claims. Germany had violated EU law insofar as it systematically refuses to request the information missing in an application for a VAT refund of foreign taxpayers and instead immediately refuses the refund applications in such cases if such information can be provided only after the 30 September deadline. Continue reading

ECJ: VAT treatment of medical telephone consultations


In a judgement of 5 March 2020 the European Court of Justice (ECJ) dealt with the question whether telephone advisory services provided by a company on behalf of state health insurance funds through so-called “health coaches” may be free from VAT. The ECJ held that VAT exemption may indeed apply, provided the services have a therapeutic or curative objective and are of a comparable level of quality as the services provided by other suppliers in this field. Continue reading

European Court of Justice: Final Losses


The European Court of Justice held in its decision Memira Holding AB issued on 19 June 2019 that when assessing whether the losses of a non-resident subsidiary are final within the meaning of its judgment in Marks & Spencer on 13 December 2005 (C‑446/03), the fact that, in the event of a merger, the subsidiary’s Member State of establishment does not does not allow the losses of one company to be transferred to another company liable for corporation tax, is not decisive, unless the parent company can demonstrate that it is impossible for it to deduct those losses through ensuring that – in particular by means of a sale- the losses are fiscally taken into account by a third party for future tax periods. Continue reading