The German court raised questions on 18 February 2020 regarding the lease of real estate for business purposes and the moment input VAT can be deducted.
Article in the EU VAT Directive
Article 167 of Directive 2006/112/EC
Article 167
A right of deduction shall arise at the time the deductible tax becomes chargeable.
Facts
The German court raised questions on 18 February 2020 regarding the lease of real estate for business purposes and the moment input VAT can be deducted.
- Applicant was leasing property intended for business purposes.
- Applicant and its landlord had validly waived a the VAT exemption and opted for VAT.
- To both, the German tax authorities had authorised to report/pay the VAT based on cashflow.
- From 2004 onwards, deferral of payment was granted for part of the rent payable by the applicant.
- As a result, in the years 2013 to 2016 applicant made payments for the lease in the years 2009 to 2012.
- These payments included 19% VAT.
- Applicant always exercised its right to deduct input VAT in the period in which the payment was made.
- However, the inspector was of the opinion that the law on deduction of input VAT had already arisen at the time the transaction was carried out, and should therefore have been exercised each time for the period in question.
- The question is, among other things, whether the right to deduct input VAT in accordance with Article 167 of the VAT Directive without exception always arises only at the time when the deductible tax becomes chargeable, or whether the
Member States may derogate from this principle.
Questions
Does Article 167 of Directive 2006/112/EC of 28 November 2006 on the common system of valued added tax 1 preclude a provision of national law according to which the right of input tax deduction already arises at the time the transaction is performed, even if, under national law, the tax claim against the supplier or service provider arises only when the remuneration is received and the remuneration has not yet been paid?
If the first question is answered in the negative: Does Article 167 of Directive 2006/112/EC of 28 November 2006 on the common system of valued added tax preclude a provision of national law according to which the right of input tax deduction cannot be asserted for the tax period in which the remuneration has been paid if the tax claim against the supplier or service provider arises only when the remuneration is received, the service has already been provided in an earlier tax period and, under national law, due to the matter being time-barred, it is no longer possible to assert the input tax claim for that earlier tax period?
AG Opinion
Decision
Personal comments/VATupdate
The German verdict can be read here.
Source
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