Germany: VAT treatment of fees under leasing agreements - KPMG Global
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Germany: VAT treatment of fees under leasing agreements (CJEU judgment)

Germany: VAT treatment of fees under leasing agreements

The Court of Justice of the European Union (CJEU) issued a judgment in a case concerning the distinction between the supply of services and the supply of goods with respect to leasing operations—a distinction that is important from a cash-flow perspective because with a supply of goods, fees under all leasing instalment arrangements are taxable as soon as the leased asset is handed over.


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The case is: Mercedes-Benz Financial Services UK, C-164/16 (4 October 2017)

In practice, the German tax authorities base their value added tax (VAT) treatment of leasing agreements on the income tax treatment of the leased asset. Given the CJEU judgment, this approach may not be permissible if it leads to different results than CJEU case law. 

Other developments

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

  • Poker games and VAT – the cards have been shuffled (BFH, decision of 30 August 2017, XI R 37/14)
  • Consequences of a VAT group (BFH, decision of 10 August 2017, V R 64/16)
  • Granting credit as an independent service (BMF, guidance of 8 November 2017)
  • Zero-rating of revenue for sea shipping and air transport (BMF, guidance of 6 October 2017)


Read a November 2017 report [PDF 300 KB] prepared by the KPMG member firm in Germany

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