Germany: VAT relief measures in response to war in Ukraine

Guidance regarding tax relief measures to provide support to those affected by the war in Ukraine

Tax relief measures to provide support to those affected by the war in Ukraine

The German Ministry of Finance (BMF) 17 March 2022 issued guidance regarding tax relief measures to provide support to those affected by the war in Ukraine. In particular, there are value added tax (VAT) relief measures for the period 24 February 2022 through 31 December 2022.

Regarding items and staff provided for humanitarian purposes free-of-charge by businesses to organizations providing an essential service, in an effort to address the consequences and aftermath for those affected by the war in Ukraine (in particular, aid organizations for refugees and for providing care for the wounded as well as other public organizations), these benefits-in-kind are not subject to VAT. 

If a trader already intended, when purchasing the supplies, to use them solely and directly for the war-relief efforts, the corresponding input VAT is basically deductible. The subsequent benefit-in-kind will not be taxed.

There will be no taxation of a benefit-in-kind and a correction of input VAT in accordance with § 15a German VAT law if private companies provide living accommodations normally intended for a use that is subject to VAT (such as hotel rooms, holiday cottages or similar) free-of-charge to individuals who have fled Ukraine as a result of the war. If these traders already intend to provide this type of accommodation free-of-charge when purchasing the supply of ancillary services (electricity, water or similar utilities), as an exception, a corresponding input VAT deduction is basically deductible. The subsequent benefit-in-kind will not be taxable.  

In addition, the BMF guidance addresses supplies provided by “special organizations”—for example charitable bodies, companies in the public sector, and public sector companies operated as a private business.

Read a March 2022 report [PDF 361 KB] prepared by the KPMG member firm in Germany.

Other topics discussed in this report include:

  • Input VAT deduction of a managing holding (Court of Justice of the European Union (CJEU) opinion of the Advocate General of 3 March 2022 – case C-98/21 – Tax Office R)
  • Input VAT deduction in the case of repair services by a subcontractor (CJEU judgment of 24 February 2022 – case C‑605/20 – Suzlon Wind Energy Portugal)
  • Provision of meals in a staff canteen as a supply of service (German Federal Tax Court, resolution of 20 October 2021, XI R 2/2)
  • Requirements for price discounts as a reduction in fees (German Federal Tax Court, decision of 18 November 2021, V R 4/21 (V R 41/17))


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