The Court of Justice of the European Union (CJEU) issued a judgment concluding that the principles of effectiveness, neutrality, and proportionality preclude a national regulation that denies a business the ability to make a correction in order to assert a right (not yet lapsed) to deduct input value added tax (VAT), merely because the correction relates to a period of time that has already been audited.
The case is: Zabrus C-81/17 (26 April 2018)
The CJEU judgment has potential implications for German law (see § 173 German tax law (AO)). The CJEU judgment could be interpreted to mean that while an assessment deadline may be allowed for retroactively claimed input VAT deductions (such as under § 169 AO), if the deadline has not yet lapsed, an input VAT deduction can only be refused in situations when there is fraud or claims of injury to the state fisc. Looked at in this respect, the provisions of § 173 AO would be in violation of EU law because they either do not serve this purpose or are disproportionate when compared to a financial penalty. It remains to be seen which conclusions the tax authorities and the tax courts will draw from this CJEU judgment.
Other recent VAT developments that may affect businesses in Germany include the following:
Read a May 2018 report [PDF 329 KB] prepared by the KPMG member firm in Germany
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