Germany: VAT on cross-border provisions of company vehicles to employees (CJEU judgment)

Germany: VAT on cross-border provisions

The Court of Justice of the European Union (CJEU) issued a judgment in a case concerning whether the cross-border provision of company vehicles to employees for business and private purposes is subject to value added tax (VAT) imposed with regard to the location where the employees reside.


The case is: QM v. Finanzamt Saarbrücken (C-288/19, 20 January 2021)

The company (an investment fund management company located in Luxembourg) made available company cars to two employees who lived in Germany. The employees could use these vehicles for both business and private purposes. For one of the employees, the vehicle was provided free-of-charge, while the other had to pay about €5,700 in costs for the use of the car. The CJEU clarified that the provision of company vehicles to employees for their private use is generally subject to VAT at the employee’s place of residence. However, in the situation of the car provided for free, taxation generally would take place at the place where the employer operates its business.

KPMG observation

The judgment may offer opportunities (e.g., reimbursement of VAT paid at the place of residence in instances where a car is made available free-of-charge) but also risks (e.g., registration obligations at the employee's place of residence in situations when the car is made available for an employee payment). The CJEU judgment is not conclusively clear as to whether the exchange-like turnover, as assumed by the tax authorities in many situations, would be obsolete and could be qualified as a provision free-of-charge. This would represent a major change in practice, and in many respects could result in adjustments to purely domestic car provisions.

Read a February 2021 report [PDF 311 KB] prepared by the KPMG member firm in Germany

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

  • Extension of the deadline for submitting 2019 VAT returns (law dated 15 February 2021, Federal Law Gazette I 2021 p. 237)
  • Draft of a Third Corona Tax Relief bill (German Bundestag, journal 19/26544)—read TaxNewsFlash
  • Taxation of travel services from companies resident in non-EU countries (German Ministry of Finance (BMF), guidance of 29 January 2021 – III C 2 – S 7419/19/10002 :004)
  • Changes to preliminary VAT returns 2021 (BMF, guidances of 14 December 2020 and of 25 February 2021 – III C3 – S 7344/19/10001 :002)

© 2023 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

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 3712, 1801 K Street NW, Washington, DC 20006.

Connect with us