German update

VAT assessment base for bonus point systems coming under review shortly at the Federal Fiscal Court

Bonus point systems are very popular with many companies. However, the VAT treatment of these customer loyalty programmes is still largely unclear on many aspects and, thus, frequently the subject of current court rulings.


VAT in online retailing – New rules since 1.1.2019

Under the Tax Act for the Prevention of VAT Revenue Losses from Trading in Goods over the Internet and Amendment of Further Tax Provisions (Federal Law Gazette (Bundesgesetzblatt, BGBl) I 2018, p. 2338), the operators of electronic marketplaces have been subject to specific obligations since 1.1.2019. These have important consequences not only for the operators themselves but also for the online traders.


Brexit and VAT – Changes to which businesses will now urgently have to adapt

VAT law in the EU is considered to have been extensively harmonised through the EU Directive on the VAT system. Once Brexit has been accomplished, this harmonisation in relation to the United Kingdom of Great Britain and Northern Ireland (GB) will automatically cease. This will result in far-reaching changes in the way VAT is charged on business transactions between GB and Germany. To-date, the German legislator, in its draft of the Brexit Accompanying Tax Act (Lower house of German parliament (Bundestag, BT) printed matter: 19/7377) has not provided for any transitional rules to mitigate the impact of this and, moreover, the future arrangements under British tax law are not yet known. Businesses would therefore be well advised to ascertain what action is required with respect to VAT and to prepare the necessary organisational and contractual adjustments. In the course of this, the following 14 major changes, in particular, should be taken into consideration.


Loss carry-forward tied to the continuation of a business in accordance with Section 8d of the German Corporation Tax Act – Filing the application

Since the introduction of Section 8d of the German Corporation Tax Act (Körperschaftsteuergesetz, KStG), losses that would have been derecognised in the event of a “harmful acquisition”, in accordance with Section 8c KStG, can now continue to be used. However, submitting the requisite application for the ascertainment of a loss carry-forward tied to the continuation of a business harbours a number of risks that are pointed out below.