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EU Commission: Non-application of EU VAT rules for farmers

On July 25, 2019, the EU Commission decided to take Germany to the European Court of Justice (ECJ) for incorrectly applying the special VAT regulation for farmers.

The Federal Court of Auditors has noted that German farmers and foresters to whom the average rate taxation applies receive a flat-rate deduction of input tax which exceeds the input tax they pay. However, according to the EU Commission’s rules, this is not permitted and leads to major distortions of competition on the internal market, especially in favour of large farmers who have no difficulties with the normal VAT rules.