Germany: Deduction of input VAT on “outplacement consultation” services, other VAT developments

Recent VAT developments that may affect businesses in Germany

Recent VAT developments that may affect businesses in Germany

The German Federal Tax Court (BFH) held (file ref. V R 32/20) that a taxpayer is entitled to deduct input value added tax (VAT) with respect to “outplacement consultation” services on the basis of a primary business interest. The taxpayer secured the services to achieve a targeted reduction of staff by offering individual employees with non-cancellable and open-ended contracts support in establishing a new position (e.g., interview training).

Other recent VAT developments that may affect businesses in Germany include the following items:

  • Direct claim in VAT and interest on arrears (CJEU, ruling of 13 October 2022 – case C-397/21 – Humda)
  • VAT-exempt granting of credit (CJEU, ruling of 6 October 2022 – case C-250/21 – Fund O)
  • Transfer of vehicle to staff for private purposes as a transaction similar to an exchange (BFH, ruling of 30 June 2022, V R 25/21)
  • Limits of the retroactive effect of an invoice correction (BFH, ruling of 7 July 2022, V R 33/20)

Read an October 2022 report [PDF 354 KB] prepared by the KPMG member firm in Germany


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