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Germany: VAT-related changes in Annual Tax Act 2024; other VAT developments

Changes include modification of definition of delivery of work

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December 2, 2024

The German Annual Tax Act 2024, which was approved by the upper house of Parliament (Bundesrat) on November 22, 2024, and the lower house of Parliament (Bundestag) on October 18, 2024, includes various changes related to value added tax (VAT).

In particular, to facilitate implementation of a 2013 decision of the Federal Tax Court (BFH), the definition of delivery of work will be modified to include only processing and finishing “third party” goods (§ 3 (4) sent. 1 German VAT Law (UStG)). The new regulation enters into effect on the day following promulgation.

Read a November 2024 report prepared by the KPMG member firm in Germany

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

  • The EU member states reached political agreement on the VAT in the digital age (ViDA) package. Read TaxNewsFlash
  • The BFH opined on the VAT treatment of free-of-charge supplies of heat for business reasons to other traders for their commercial activity (September 4, 2024 decision – XI R 15/24 (XI R 17/20)).

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