- Munich Fiscal Court referred to the CJEU the question whether Germany’s EUR 1,000 de minimis threshold for input VAT adjustments under Section 44(1) UStDV is compatible with the VAT Directive when a business changes from flat-rate VAT to the normal VAT regime.
- The case involves an agricultural business that switched from Section 24 UStG flat-rate taxation to regular VAT on 1 January 2023 and sought an input VAT adjustment for 2022 purchases of seeds, fertilizer, fuel, and other supplies used in 2023.
- The tax office denied part of the adjustment, relying on the de minimis rule for each individual asset, which resulted in disallowing EUR 1,140 of adjustments.
- The court indicated that EU law’s adjustment mechanism aims to ensure full VAT neutrality and that Member States may not use implementing rules to substantively exclude adjustments where the change in taxation method would otherwise create distortions.
- The court also questioned whether the threshold truly simplifies administration, since it requires detailed allocation of input tax to individual assets or outputs before it can be applied.
Source: assets.kpmg.com
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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