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VAT payment in the case of “0% financing”

BFH, ruling of 24 February 2021, XI R 15/19

The German Federal Tax Court (BFH) has ruled on the VAT payment of a supply of goods with “0% financing”.

In this case the supplying trader bears the costs for the financing of the  purchase price by a bank in such a way that the bank, in the course of paying out loan amounts to the trader, retains the interest, and  the customer pays the purchase price to the bank in installments. The BFH concludes that the interest retained does not reduce the payment for the trader’s supply of goods to the customer, even if the trader states in the invoice to the customer that they are granting the customer a discount in the amount of the  interest.

Source KPMG


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