Payments that are made on the basis of copyright warnings to enforce the right to cease and desist are to be qualified as remuneration in the context of an exchange of services between the entrepreneur and the legal infringer warned by him.
In its ruling of February 13, 2019, XI R 1/17, the BFH ruled that payments made to an entrepreneur as reimbursement of expenses on the basis of copyright warnings for the cease-and-desist claim are regarded as remuneration for VAT purposes in the context of a VATable exchange of services between the entrepreneur and the person and the infringer against whom he has issued a warning. There is a direct connection between the remuneration paid and the warning service. From the point of view of value added tax law, a possible uncertainty of a payment is not suitable for the direct connection between the service rendered by the service provider and the payment received, if any. It was also irrelevant on which national civil law basis the payment basis for the payment claim.
In an earlier ruling of December 21, 2016, XI R 27/14, the BFH had ruled that payments made to an entrepreneur by his competitors as reimbursement of expenses on the basis of competitors on the basis of warnings under competition law were subject to value added tax.
There is no non-taxable compensation for damages.
The BFH is of the opinion that the entrepreneur issuing the warning notice has for his part the warned party a taxable service according to § 1 para. 1 no. 1 sentence 1 UStG.
Pursuant to Sec. 1 (1) No. 1 Sentence 1 UStG, the supplies and other services which an entrepreneur performs in Germany for consideration within the scope of his business are subject to VAT, with the consideration in this case being the reimbursement of expenses.
The service in this case also ultimately consists in the fact that the person issuing the warning notice way to indemnify the warning party as a cease and desist creditor without recourse to the courts.
The warning party is granted a concrete advantage, with which the warning party which is directly linked to a claim for payment for the person issuing the warning.
The object of performance of a warning company vis-à-vis a warned party is the warning. .. In this way, he can avoid a lawsuit. The infringer is thus given the opportunity to avert a legal dispute in a cost-effective manner by submitting a cease-and-desist declaration with a penalty clause.
The damages claimed on the basis of the justified cease-and-desist letter, on the other hand, are not subject to value-added tax as not subject to value added tax as genuine damages.
The time of the other service is determined by when the service is rendered. is effected. This is the case if an economic advantage is granted to the person warned.
The point in time of the service is the receipt of the warning by the warned party. For reasons of simplification, it is not objected if the taxpayer pays the tax for the warning service in the tax period in which the warning notice is sent to the person was sent to the warned party. If the warned party substantially disputes the infringement, the warned party shall pay the tax amount in the taxable period in which the
the warning is disputed.
Source: bundesfinanzministerium.de
