Value added tax (VAT)
German value added tax (Umsatzsteuer, Mehrwertsteuer) is
inextricably linked to European VAT harmonization.
In addition to
the German Value Added Tax Law including complementary op-
erating regulations and guidelines, Community law has become
increasingly important. One of the reasons for this is that, as
a rule, Community law prevails over national law.
EU Directive 2006/112/EC (also referred to as the Common VAT System Di-
rective, CVSD) – previously Directive 77/388/EEC – is particularly
relevant to day-to-day tax practice. Regarding the interpretation
of VAT law, both the case law of the Court of Justice of the Euro-
pean Union (CJEU) and of the German Federal Tax Court (BFH)
are important sources.
On January 1 2010 the first phase of so-called VAT Package
entered into force in the EU. In its essence it contains new
rules on the place of supply of services, the reverse charge
mechanism (cases in which VAT is owed not by the provider but
by the recipient of the service), on fling requirements and the
input VAT refund procedure within the EU. The fnal phase of the
VAT package is effective since January 1 2015.
It includes new regulations for telecommunication services, radio and television
services, and electronically supplied services.