General Court VAT Case – T-548/26 (Finanzamt Freising) – Questions – Input VAT adjustment after changing taxation schemes: German de minimis threshold

The Finanzgericht München has submitted a request for a preliminary ruling in proceedings between HG, a German farmer, and the Finanzamt Freising concerning VAT for 2023. The applicant moved from Germany’s agricultural average flat-rate taxation scheme to the standard VAT scheme on 1 January 2023. She seeks an adjustment of input VAT relating to goods and services purchased before the change and used to cultivate cereals subsequently sold under the standard taxation scheme. The tax authority partially refused the adjustment because the input VAT allocated to certain individual assets or cereal sales did not exceed the EUR 1,000 threshold under Paragraph 44(1) of the German VAT Implementing Regulation. The referring court asks whether this partial exclusion is compatible with the VAT Directive’s adjustment rules and the requirement to prevent unjustified advantage or harm when a taxable person changes taxation schemes. The request was lodged on 27 July 2026 and is pending as Case T-548/26. [juris.curi….europa.eu]

Articles of the EU VAT Directive 2006/112/EC discussed

• Article 168
  Establishes the taxable person’s right to deduct VAT due or paid on goods and services used for taxed transactions. It is relevant because the referring court considers the right of deduction an integral part of the VAT system that may, in principle, not be limited.
• Article 184
  Provides that the initial deduction must be adjusted where it is higher or lower than the deduction to which the taxable person was entitled. It is directly referenced in the preliminary ruling question because the applicant’s move to standard taxation may require correction of the deduction previously determined under the flat-rate scheme.
• Article 185(1)
  Requires an adjustment where, after the VAT return has been made, a change occurs in the factors used to determine the deductible amount. It is directly referenced in the question because the change in the applicant’s form of taxation affected the basis on which her deductible input VAT was determined.
• Article 186
  Requires Member States to lay down detailed rules for applying Articles 184 and 185. It is relevant to whether Germany may introduce a EUR 1,000 de minimis threshold as a procedural rule or whether that threshold instead constitutes an impermissible substantive exclusion from the adjustment mechanism.
• Article 189(d)
  Allows Member States, in relation to adjustments concerning capital goods, to adopt measures permitting administrative simplifications. It is discussed because the referring court questions whether this provision could justify the German de minimis rule, particularly where the assets concerned are current assets and the rule requires an individual allocation of input VAT.
• Article 192
  Provides that, when a taxable person transfers from normal taxation to a special scheme or vice versa, Member States may take all measures necessary to ensure that the taxable person neither enjoys an unjustified advantage nor sustains unjustified harm. It is directly referenced in the question because the applicant changed from the agricultural flat-rate scheme to standard taxation.
• Article 302
  Provides that, where the flat-rate compensation percentages offset the input VAT charged on goods and services acquired by flat-rate farmers, those farmers are not entitled to deduct that input VAT. It is relevant to the applicant’s inability to claim additional deductions for inbound supplies while she remained subject to the agricultural flat-rate scheme.

Preliminary Ruling Questions

1. Does a national provision such as Paragraph 44(1) of the Umsatzsteuer-Durchführungsverordnung (VAT Implementing Regulation; ‘the UStDV’), which partially precludes adjustments of input VAT deductions in the event of a change in the form of taxation, contravene the principles arising from Article 192 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’), as well as Articles 184 and 185(1) of that directive?

Key Takeaways

• The case concerns whether a national de minimis threshold may prevent an input VAT adjustment following a move from an agricultural flat-rate scheme to standard VAT taxation.
• The ruling may clarify the limits of Member States’ discretion under Articles 186 and 192 when national simplification measures restrict adjustments required by Articles 184 and 185.
• The outcome may affect farmers and other taxable persons changing VAT schemes where input costs arise before the change but support transactions taxed under the new scheme.

Source

CURIA – Case T-548/26, Finanzamt Freising [juris.curi….europa.eu]