German Court clarifies the process for challenging tax assessments in a VAT group
VAT grouping has been the centre of many debates in the recent years, legal uncertainty required some retroactive adjustments. For instance, the CJEU had to confirm that supplies within a VAT group are not taxable, providing relief for many taxpayers.
In response to another question referred by the BFH, the CJEU held that partnerships may also be part of a VAT group. This led to a change in German case law, i.e. that partnerships with a capitalistic structure, such as a GmbH & Co. KG, can indeed form part of a VAT group.
In the present case, the plaintiff, a GmbH & Co. KG, requested a refund of VAT paid on a purchase from its shareholder, arguing that a VAT group had been established due to the change in German VAT law. This request was also denied by the tax office.
The BFH held that both the controlled company and the controlling company had to submit a request for amending their tax assessments.
Key takeaway
For the BFH, it would be contradictory to apply different case law to the controlling and the controlled company. Taxpayers are therefore encouraged to make sure that they apply this principle when dealing with tax assessments within a VAT group.
