For a long time, it was assumed that the concept of immovable property in VAT and income tax was to be understood as being broadly congruent. In 2020, the German Federal Fiscal Court (BFH) published its ruling of 07.11.2019 – I R 46/17, wherein the court had to decide whether a photovoltaic system can constitute a construction, requiring the service recipient to withhold construction withholding tax. The court ruled that the term “construction” is to be understood much more broadly for the purposes of construction withholding tax than it is for VAT purposes. The German Ministry of Finance (BMF) included this in a revised letter dated 19.07.2022, which replaces, with immediate effect, the BMF letter of 27.12.2002. Companies must now differentiate more precisely between the various types of tax, when immovable property is involved.
Source KMLZ
