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VAT Treatment in Invoice for Division of Assets: BFH Ruling and Implications

  • The BFH ruling concerns showing VAT in an invoice in relation to § 24 (1) UStG.
  • The case involves a private corporation under civil law (GbR) that carried out farming activities on leased land.
  • The partners in the GbR agreed to dissolve the GbR and transfer the assets to the partners as part of the division.
  • One partner received the right to use leased land and the other partner received the remaining assets.
  • The GbR issued an invoice to one partner showing VAT for the assets allocated to him.
  • The tax authorities considered the transfer of assets as a non-taxable sale of a business and the GbR owed the VAT shown on the invoice.
  • The Lower Tax Court initially allowed the action brought by the GbR, but the tax authorities appealed to the BFH.
  • The BFH ruled that the GbR is the issuer of the invoice with VAT and is therefore liable for the VAT debt.
  • The GbR is not entitled to an input VAT deduction from the transfer as part of the division.
  • The supply of machinery used only for transactions in accordance with § 24 (1) UStG is not subject to average rate taxation.
  • The BFH has abandoned its previous contradictory case law on this matter.


Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.


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