- The German Ministry of Finance (BMF) issued two letters on April 1, 2026, implementing recent BFH court rulings regarding VAT treatment of non-economic activities by public bodies.
- When the use of goods or services shifts more towards sovereign (non-economic) activities, the previous practice of taxing this as a deemed supply is replaced by an input tax adjustment under § 15a UStG.
- The same principle applies to VAT groups (Organschaft), especially for internal transactions within the group.
- These changes mainly affect municipalities and other public law entities but may also impact associations, financial holdings, and similar structures with non-economic activities.
- The new rules do not change the treatment of purely private or non-business use, which remains subject to the existing rules on deemed supplies.
Source: bakertilly.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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