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Germany: Implementation of EU “quick fixes” in VAT law for 2020

Germany: Implementation of EU “quick fixes” in VAT law

The German federal cabinet at the end of July 2019 approved the government’s draft bill that would implement EU “quick fixes” for the value added tax (VAT) treatment of chain transactions in the European Union, among other measures. It is proposed that the measures would have an effective date of 1 January 2020.

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Implementation of the “quick fixes” in German VAT law concerns:

  • Harmonization of the VAT treatment of chain transactions in the EU
  • Tightening of the requirements for zero-rated intra-EU supplies of goods
  • Simplification for cross-border consignment stock cases in the EU
  • Standardization of documentary proof in the case of zero-rated intra-EU supplies of goods

Additional VAT changes to be effective beginning 1 January 2020 concern the VAT exemption of cost-sharing alliances; the so-called “export over the shop counter” rule; the input VAT refund procedure; restrictions in the input VAT deduction for traders who are not residents of the EU; obligations of fiscal representatives; repeal of § 25d German VAT law (liability); and rejection of input VAT deduction and zero-rating in the instances when there is participation in tax evasion.

The VAT changes also include a new place of benefits-in-kind, the reduced VAT rate for e-books, and changes regarding travel services.

Read an August / September 2019 report [PDF 333 KB] prepared by the KPMG member firm in Germany.

Other recent VAT developments that may affect businesses in Germany include the following items:

  • Customs misconduct and import VAT (CJEU judgment of 10 July 2019 ‒ case C-26/18)
  • Taxes arising due to agency services remunerated in installments (German Federal Tax Court, decision of 26 June 2019, V R 8/19)
  • Taxation of residual balances accruing to the provider resulting from prepaid contracts (German Federal Tax Court, ruling of 10 April 2019, XI R 4/17)

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