Germany: Supply of heat to property owners is subject to VAT (CJEU judgment)

Germany: Supply of heat to property owners, VAT

The Court of Justice of the European Union (CJEU) today issued a judgment concluding that the supply of heat by a group of residential property owners to its members is subject to value added tax (VAT).

1000

Related content

The case is: WEG Tevesstraße v. Finanzamt Villingen-Schwenningen, C-449/19 (17 December 2020)


Summary

As explained in a related CJEU release [PDF 239 KB], an association of residential property owners formed as a limited liability company, a public authority, and a municipality together operate a co-generation power unit on land belonging to its members. The electricity produced is supplied to an energy distribution company, but the heat produced is supplied to its members.

Regarding the supply of heat, the tax office for Villingen-Schwenningen denied a claim for deduction of input VAT in connection with the purchase and operation of the co-generation power unit on the ground that the supply of heat by an association of property owners to its members is a transaction that is exempt from VAT under the German law on turnover taxes. A German court referred a question to the CJEU concerning whether the VAT Directive precludes national legislation that exempts from VAT the supply of heat by an association of residential property owners to its members.

The CJEU today issued a judgment holding that the VAT Directive applies in the present case and that the supply of heat is a supply of property that is, in principle, subject to VAT.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal