- The Federal Ministry of Finance clarified VAT treatment for permanently loss-making institutions receiving public subsidies, following a Federal Fiscal Court decision.
- The distinction between remuneration for a service and economic activity must be assessed separately.
- A two-step review is required: first, whether there is a direct link between payment and service; second, whether the activity constitutes an economic activity aimed at generating income.
- If costs consistently exceed received payments, there may be no taxable exchange of services.
- The guidance applies to all open cases, with certain non-objection rules specified.
Source: blogs.pwc.de
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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