Germany: VAT treatment of transfer of business as a going concern

Germany: VAT treatment of transfer of business

The German Ministry of Finance (BMF) issued an opinion (III C 2 – S 7100-b/19/10001 :004 (16 November 2020)) addressing the value added tax (VAT) treatment of the sale of a business in its entirety while its corporate activity continues—that is, as a going concern.


The opinion’s provisions must be applied in all pending cases.

According to the BMF opinion, the transfer of leased property that results in the sale of a business “in its entirety” is not subject to VAT if the purchaser, by taking over a leasing company from the seller, enters into the existing rental agreements on acquiring the property. The BMF opinion, reflecting the jurisdiction of the German Federal Tax Court into consideration, discusses when a sale by a property developer is the sale of a business. Furthermore, the BMF opinion comments on the VAT treatment of multi-stage transfers.

Read a December 2020 report [PDF 418 KB] prepared by the KPMG member firm in Germany

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

  • Input VAT deduction of a holding company (Court of Justice of the European Union (CJEU), judgment of 12 November 2020 – case C- 42/19 – Sonaecom)
  • Correction of an input VAT deduction in the case of real estate activities (CJEU, judgment of 12 November 2020 – case C-734/19 – ITH)
  • VAT treatment of travel services (German Ministry of Finance (BMF), guidance of 30 November 2020 - III C 2 - S 7419/19/10001 :001)
  • VAT consequences of the withdrawal of the United Kingdom from the European Union (BMF, guidance of 10 December 2020 – III C 1 - S 7050/19/10001 :002)

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