On 20 January 2021 the European Court of Justice (CJEU) handed down its conclusions (Case C-288/19) related to a case pending in front of the Saarland Fiscal Court. The CJEU ruled on whether German VAT can be applied on the provisions of a company car by a foreign (here Luxembourgian) entrepreneur to a German domiciled employee. The decision turned on whether the provision of the car constituted a long-term rental of a means of transport to an end consumer within the meaning of the place of taxable transaction provision of Art. 56 (2) of Directive 2006/112/EC.
Article 56(2) of the VAT Directive states that the place of taxation of the rental of a means of transport to a non-entrepreneur (such as an employee) for an uninterrupted period of more than 30 days is where the non-entrepreneur (in this case, the employee) is established, has his or her permanent address, or usually resides.
Source: BDO
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