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Germany: Reduced VAT rate for e-publications; other VAT amendments

Germany: Reduced VAT rate for e-publications; other VAT

The German Parliament (Bundestag) on 7 November 2019 passed legislation that includes value added tax (VAT) changes—including the EU “Quick Fixes” in German domestic law, effective 1 January 2020.

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The legislation is known in English as: “Law on further fiscal support for electromobility and the amendment of other tax provisions” and is often referred to as the “Annual Tax Law 2019.” In comparison to the government’s draft of the legislation, the following changes were approved during the parliamentary process:

  • Reduced rate of VAT for electronic publications (e-publications)
  • Reverse-charge procedure for transfers of gas and electricity certificates

According to a Bundestag resolution, if approved by the Bundesrat (Federal Council) in one of its last sessions of the year, the legislative process could still be completed in this year.


Reduced rate of VAT for electronic publications

Books, newspapers, magazines, and other products in electronic format (as listed in VAT law) will be subject to a reduced rate of VAT—whether or not the product is also offered in a physical form. Publications that consist entirely or mainly of video content or audible music will not be allowed this advantage. Similarly, publications that are entirely or mainly for advertising purposes, including travel advertisements, will be excluded from the reduced VAT rate.

In an extension to the government legislative draft, the provision of access to databases that contain a large number of electronic books, newspapers or magazines, or parts of these, will also benefit from the reduced VAT rate.

The VAT reduced rate measure is intended to promote reading, regardless of the type and functionalities of the provision of the reading material. Accordingly, publications that benefit from the reduced VAT rate will also include publications with a portion of multimedia and interactive elements (so-called “enhanced e-books”).

New regulations will be effective on the day after the pronouncement of the law.


Reverse-charge procedure when transferring gas and electricity certificates (§ 13b (2) no. 6 UStG-E)

The tax liability of the recipient of a supply (trader) will be extended to the transfer of gas and electricity certificates. The provision corresponds to Article 199a (1) (f) of the VAT Directive. To counter VAT evasion, the German provision—similar to that in other EU Member States—will apply to all gas and electricity certificates.

Up to now, the reverse charging of VAT only comes into question if the supplying trader is not resident in Germany. According to the new provision, a reverse charge will also take place if the supplying trader is resident in Germany. The new provision will be effective 1 January 2020.

Read a November 2019 report [PDF 329 KB] prepared by the KPMG member firm in Germany

Other recent VAT developments that may affect businesses in Germany included in this report are as follows:

  • Improved anti-fraud methods in electronic commerce and support for small businesses (European Commission, press release of 8 November 2019)
  • CJEU referral submission on cross-border transactions between VAT group and subsidiary (CJEU, reference for a preliminary ruling (Sweden) of 30 October 2019)
  • VAT liability of subsidies (CJEU, judgment of 9 October 2019 ‒ joined cases C-573/18 (C GmbH & Co. KG) and C-574/18 (C-eG))
  • CJEU referral submission on cross-border pharmacy discounts (German Federal Tax Court (BFH), resolution of 6 June 2019, V R 41/17)
  • Employer assuming relocation costs no taxable turnover (BFH, ruling of 6 June 2019, V R 18/18)

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