- The German Ministry of Finance clarified VAT rules for permanently loss-making public institutions receiving subsidies, providing legal certainty for municipalities and public bodies.
- Recent changes to the VAT Application Decree systematically implement established EU and German court rulings, especially regarding the distinction between entrepreneurial and non-entrepreneurial activities.
- The new rules introduce a two-step test: first, whether there is a direct link between service and payment (genuine consideration); second, whether the activity is economic in nature.
- Municipalities and public bodies must review their service relationships and secure potential input VAT deductions.
Source: roedl.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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