Section 2b UStG - an endless story

Section 2b UStG has a long history. Its original application was planned for 1 January 2017. A transitional regulation, according to which the old legal situation of Section 2 (3) UStG continued to apply, was planned until 31 December 2020. In the course of the coronavirus pandemic and other challenges, the transitional regulation was extended to 31 December 2022 and 31 December 2024. With the Annual Tax Act 2024, a further two-year extension of the transitional regulation until 31 December 2026 was decided due to further unresolved and newly arising legal application issues.

Particular attention should be paid to three aspects:

1. Option to apply the old regulation: This time too, legal entities that have not yet applied the new regulation can make use of an option. The extent to which this will happen remains to be seen as the legislative process continues.
2. Binding information: Many people in church administration have dealt with these complex issues in recent years. The new regulation of Section 2b UStG raises considerable questions and uncertainties regarding the future tax treatment of circumstances. In order to counteract the uncertainties, a so-called binding information can be obtained from the tax authorities in accordance with Section 89 (2) AO for situations that have not yet been realised
3. Link to the tax CMS: The introduction of Section 2b UStG is often linked to the introduction of a tax compliance management system (CMS).

There are two tools that can help with the implementation of the regulations:

• the "KPMG § 2b-Check"
• a training programme that prepares and communicates the new legal situation of Section 2b UStG for legal entities under public law and their employees in a target group-specific manner. Participants can systematically deepen their knowledge and basic understanding of the VAT regulations using numerous practical examples.

The original purpose of this regulation has now been lost sight of. The purpose of § 2b UStG is to ensure equality of competition. The result is an isolated activity-based and no longer an organisation-based consideration of the respective legal entity with regard to its status as an entrepreneur.

Even despite this multiple extension of the transitional periods, it can be assumed that this regulation will ultimately find its way into German tax law.