Is the tax owed on the return of equity

Time of performance

1. Significance

The exact time of a delivery or other service subject to VAT is of decisive importance for the question of Tax accrual in the Taxation according to agreed fees (Debit taxation). According to § 13 Paragraph 1 No. 1 Letter a Sentence 1 UStG in conjunction with § 16 Paragraph 1 Sentence 1 UStG, the tax arises in these cases in principle at the end of the pre-notification period in which the respective Performance executed has been. Notwithstanding this, the sales tax arises in the case of so-called. Partial services according to § 13 para. 1 no. 1 letter a sentence 2 in conjunction with sentence 1 UStG at the end of the pre-registration period in which the individual partial service was carried out. Partial services are available if the service in question is economically divisible and a separate payment agreement has been concluded, Section 13 Paragraph 1 No. 1 Letter a Clause 3 UStG. The classic case of a partial service is a permanent property rental with - as usual in general business dealings - monthly rent payment. As a result of the tax incurrence, the time of the service is also decisive for the pre-registration period in which the respective sales tax is to be reported to the tax office (see section 13.1 UStAE).

In the exceptional case of Actual taxation (Taxation according to the collected fees) the sales tax does not arise when the service is performed, but only at the end of the pre-registration period in which the respective Service fee received has been. In this respect, the exact point in time of the performance is not of decisive importance for the tax arising. The actual taxation can under the conditions of § 20 UStG at the request of the Stpfl. approved by the FA (see section 13.6 UStAE). In addition, in the case of debit taxation, taxation after the time of receipt of the service fee is also possible, namely whenever the fee was received in whole or in part before the performance or partial service, i.e. a down payment, advance payment or advance payment was made ( Down payment taxation), § 13 Paragraph 1 No. 1 Letter a Clause 4 UStG in conjunction with Section 13.5 UStAE). So as far as advance payments are made, the tax arises - even with debit taxation - according to the actual principle.

2. Time of delivery

2.1. Time of the unmoved delivery

Deliveries - including factory deliveries - are generally carried out at the point in time at which the recipient of the service received the Power of disposal over the item to be delivered attained. In the case of deliveries without movement of goods (unmoved deliveries), this is the point in time of the transfer of civil or at least beneficial ownership, see Section 13.1, Paragraph 2, Clause 1 UStAE).

A special regulation applies to Factory deliveries in the construction industry, in particular services for the production, expansion, expansion or repair of buildings. Insofar as an acceptance test has been agreed between the building contractor and the client in these cases, the delivery of the work will be carried out in accordance with Section 13.2 Paragraph 1 Clause 2 No. 1 UStAE im Time of handover and acceptance of the completed plant. This applies regardless of the fact that ownership of the building materials used is transferred to the client at the time of their connection with the land in accordance with the relevant provisions of the BGB (§§ 946, 93, 94 BGB).

2.2. Time of the moving delivery

In contrast to the unmoved delivery, deliveries with goods movement (moving deliveries), for which the place of delivery is determined in accordance with Section 3 (6) UStG, in accordance with Section 13.1 (2) sentence 2 UStAE at the time of Start of transportation or dispatch of the subject as executed (see BFH of December 6, 2007, V R 24/05, BStBl II 2009, 490). The time of delivery therefore follows the place of delivery.

2.3. Successive deliveries

With so-called Successive supply contracts the time of each individual delivery is decisive. However, deliveries of electricity, gas, heat, cold and water are only to be treated as carried out after the respective reading period has expired. The advance payments made by the collective bargaining customers during the reading period are not to be regarded as remuneration for partial services; however, they already lead to the tax being generated at the end of the pre-notification period of their collection in accordance with Section 13 Paragraph 1 No. 1 Letter a Clause 4 UStG (see Section 13.1 Paragraph 2 Clause 3 ff. UStAE).

3. Time of the other service

According to Section 13.1 Paragraph 3 UStAE, other services, in particular work services, are generally included in the Time of their completion executed. At temporary permanent services, E.g. toleration or omission services (see section 3.1, paragraph 4 UStAE), the service is carried out upon termination of the corresponding legal relationship, unless the parties involved had agreed on partial services (see section 13.4 UStAE).

A special regulation also applies here to Works in the construction industry, in particular services in connection with the manufacture, expansion, expansion or repair of structures, provided that it is not a matter of factory deliveries. Insofar as an acceptance test has been agreed between the building contractor and the client in these cases, the work will be carried out in accordance with Section 13.2 Paragraph 1 Clause 2 No. 2 UStAE) in Time of handover and acceptance of the completed plant.

4. Special cases

4.1. Leasing companies

A leasing company, which gives its customer (tenant) a thing against payment of monthly leasing installments, provides a continuous service, which according to the agreement on the monthly leasing installments in the form of Partial services (see section 13.4 UStAE) is effected (section 13.1 paragraph 4 UStAE). The tax arises at the end of the monthly pre-registration period, for which the leasing rate is to be paid.

If the leasing company assigns its claim against the tenant for payment of the leasing installments to a bank that assumes the risk of default of the acquired claim, the Collection of the assignment fee not to the immediate accrual of the tax for the rental according to § 13 para. 1 no. 1 letter a sentence 4 UStG, because the transfer fee is not at the same time payment for the rental service on which the claim is based. The bank pays the assignment fee for the acquisition of the claim, but not as a third party for the performance of the leasing company to the tenant. Rather, the leasing company collects the fee for its rental service when the tenant pays the leasing installments to the bank, because it is released from its obligation to guarantee the legal validity of the claim against the bank at the same time. This time of receipt will usually coincide with the time of the execution of the individual partial service.

With judgment of November 27, 2019, VR 25/18 (LEXinform 0952038), the BFH decided that the service in a sale-and-lease-back transaction is only provided with the termination of all legal relationships on which this service is based, if the service of the The buyer (lessor) is involved in the accounting of the seller (lessee) as a time-limited continuous service.

In the event of a dispute, a GbR acquired electronic systems from a GmbH in 2006 and immediately leased them back to the GmbH for a period of 48 months. The GmbH granted the GbR loans to finance the purchase price. The reason for this sale-and-lease-back business was to enable the GmbH to recognize an asset item in the form of a claim against the GbR in its balance sheet and thus to show more equity. The GmbH was unable to show the systems it developed itself as intangible assets in accordance with Section 248 (2) HGB old version in conjunction with Section 5 (2) EStG in its balance sheet. In March 2007 the GmbH only paid the first leasing installment for February 2007, no further payments were made, whereupon the GbR finally terminated the Lessing contract in January 2008.

The GbR assumed that it had rendered sales taxable leasing services and in March 2007 charged the GmbH with leasing fees of € 23,500 per month plus sales tax of € 4,465 for the full term of the contract. In the 2007 sales tax return, she only declared sales tax for the leasing installment paid in March 2007. In contrast to this, the tax office and the tax court accepted a VAT-free loan and considered the sales tax of € 4,465 per month agreed in the leasing contract as not legally owed, so that the invoice contained an incorrect tax statement according to § 14c UStG. Accordingly, the FA set the sales tax in 2007 at € 49,115 (€ 4,465 x 11 months).

In the appeal proceedings of the first legal course, the BFH overturned the previously issued FG judgment and referred the matter back to the FG (BFH of April 6, 2016, V R 12/16, BStBl II 2017, 188). The main content of the service was not the granting of a loan, but the participation in the balance sheet structure, which enabled the GmbH to activate a claim as a countervalue for the intangible assets it created itself. In the second legal process, the FG upheld the lawsuit. The cooperation was not provided as a one-off service (not as a continuous service) in the year of dispute 2007, but in the previous year 2006. With a renewed revision, the FA objected that the GbR had not brought about a one-off contribution but rather partial services leading to a continuous service.

In the opinion of the BFH (judgment of November 27, 2019, V R 25/18, LEXinform 0952038), there is a time-limited continuous benefit in the event of a dispute. The entirety of the contracts (purchase, loan, leasing) shows that the service of the GbR consists neither in a delivery nor in a transfer of use, but in the participation in a balance sheet structure at the GmbH. This cooperation was not provided in the year of dispute 2007 and also - contrary to the FG - not in 2006, but only in 2008, so that the sales tax did not arise in 2007. The re-qualification of purchase, loan and leasing into a cooperative effort means that the remuneration does not consist of the sum of the leasing installments, but rather the balance of the leasing installments, purchase price and loan interest.

In the case of temporary permanent benefits (e.g. tolerance or omission benefits), according to the BFH, the termination of the underlying legal relationships is important for the performance of the service and thus for the issue of taxation (A 13.1 para. 3 UStAE). The point in time of the defining service act is not decisive for the origin of the tax, but the point in time at which the service is completed as a whole. In the event of a dispute, the service was only concluded with the termination of the leasing contract through termination in 2008 and thus not in the year of dispute 2007.

Furthermore, the BFH made it clear that in the event of a dispute, there are neither partial payments nor advance payments, which, according to Section 13 (1) no. 1 letter a, sentences 2 to 4 UStG, would have had an impact on the timing of the tax. The acceptance of partial services fails due to the lack of economic divisibility of the contribution provided. It is not decisive that monthly leasing installments were agreed, because in the event of a dispute there is no transfer of use, but rather a contribution. Down payments would only be considered if the GbR had received payments that exceeded the payments made by it (purchase price and loan interest), which was not the case.

Finally, in the opinion of the BFH, there is also no tax liability according to § 14c UStG, since the one-off tax statement does not exceed the total tax owed for the contribution. Whether the issued invoice is to be regarded as a recurring invoice can be left open due to the lack of further payments.

4.2. Sale of accounts receivable

In accordance with the principles outlined under 4.1, the procedure is also to be followed in other cases in which receivables for services or partial services still to be performed are sold (Section 13.1, Paragraph 5 UStAE).

4.3. Purchase on trial / purchase with a right of return

In the case of a purchase on a trial basis (§ 454 BGB) by mail order, the purchase contract does not come into being when the goods are sent, but only after the end of the approval period granted by the seller or by transferring the purchase price. Only at this point in time is the delivery carried out under VAT law (BFH dated December 6, 2007, V R 24/05, BStBl II 2009, 490).

On the other hand, in the case of a purchase with a right of return, the purchase contract has already come into being when the goods are dispatched and the delivery has been carried out (Section 13.1, Paragraph 6 UStAE).

5. Referral procedure to the ECJ

The Fifth Senate of the BFH had to deal with the following issues in the proceedings pending under Az.V R 16/19, LEXinform 5023077:

The plaintiff paid tax on its sales according to the agreed remuneration and, in the year of the dispute, 2012, based on a corresponding fee agreement dated November 7, 2012, provided a taxable brokerage service within the framework of a property purchase agreement to a GmbH. According to the preamble to the fee agreement, the property purchase contract had already been notarized, so that the plaintiff had already fulfilled its mediation service at this point in time. In return for the agency service, a fee of € 1,000,000 plus sales tax was agreed, which was to be paid in five installments of € 200,000 plus sales tax each. The partial amounts were due every year, with the first partial amount due on June 30, 2013. In the following years, the plaintiff prepared invoices with tax identification for the respective partial amounts of € 100,000 at the respective due date, received them and made them subject to sales tax in five partial amounts and in five consecutive years according to the receipt. It is disputed between the parties whether the proportional taxation of the brokerage service in partial amounts is permissible after they have been collected, or whether the sales tax has already arisen in full earlier and is therefore also to be paid.

Following a special sales tax audit, the responsible FA took the view that the plaintiff had to pay tax on the entire agency fee in the year of the dispute, 2012, because the agency service had already been provided in full that year.

The FG Rhineland-Palatinate upheld the complaint filed by the plaintiff after unsuccessful objection proceedings by judgment of March 26, 2019 (3 ​​K 1816/18, EFG 2019, 835). The plaintiff had already provided her mediation service in the year of the dispute, as can be seen from the fee agreement. However, taking into account the ruling of the ECJ on the VAT Directive and the ruling of the BFH, with the exception of the first amount received in 2013, it can be assumed that it will not be recoverable in accordance with Section 17 (2) no.1 and (1) sentence 1 UStG.

In the subsequent revision procedure, the BFH requested a preliminary ruling on 7 May 2020 (BFH VR 16/19, LEXinform 5023077) to ask the ECJ to answer the question of whether a service provided once - as in the case at hand - and therefore not related to a period of time subsequent invoices or payments within the meaning of Art. 64 Paragraph 1 of the VAT Directive and thus the possibility of sales taxation after receipt of the respective partial amounts already result from the agreement of an installment payment.

If this question is answered in the negative, the BFH would also like to know from the ECJ whether non-payment within the meaning of Art. 90 (1) VAT Directive can be assumed if the taxpayer when providing his service, it is agreed that this is to be remunerated in five annual installments and that national law provides for a correction in the event of later payment through which the previous reduction in the sales tax assessment base according to this provision is reversed. In this case, too, the sales tax could ultimately not be paid in full, but in partial amounts.

The BFH has suspended the pending proceedings (BFH V R 16/19, LEXinform 5023077) until the decision of the EUGH in the preliminary ruling procedure. So the outcome of the proceedings remains to be seen, which is being conducted at the EUGH under Az. C-324/20,

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