Through a circular dated 24 June 2021, Germany’s federal Ministry of Finance (MOF) published revised administrative guidance on the VAT treatment of travel services. The revisions were made in response to the amendments by the “Act on the Further Tax Promotion of Electric Mobility and the Amendment of Other Tax Regulations” published on 17 December 2019. The amendments were necessary after the Court of Justice of the European Union (CJEU) ruled in a decision dated 8 February 2018 that provisions of section 25 of the German VAT Act that previously were applicable regarding the taxation of travel services were contrary to EU law (case C-380/16). The MOF’s circular also includes additional clarifications and modifications relating to the VAT treatment of travel services.
The circular’s provisions generally apply to all open cases as from 24 June 2021, with the exception of certain amendments to the German VAT Application Decree (section 25.3) relating to the calculation of individual margins, which apply to transactions carried out after 31 December 2021. In addition, the circular confirms that a “non-objection rule” provided in a 29 January 2021 MOF circular (described further below) continues to apply as set forth in that circular and indicates that the tax authorities will not object if entrepreneurs apply the version of section 25 of the VAT Application Decree that was effective on 1 June 2021 to transactions carried out up to 31 December 2021.
Source Deloitte
