093. VAT Rate For Sales Of Software

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In a decision dated 13 March 1997 (DStR 1997, 886), the Federal Tax Court held that the sale of standard software by a distributor is subject to the standard VAT rate (currently 15 %). The sale of the operating manual is subordinate to the sale of standard software and assimilated to it.

The grant and transfer of rights under the copyright law would be subject to the reduced VAT rate (currently 7 %). It is still unclear whether the development and sale of individual software falls under this category or not. In a decision of even date with the preceding one (DStR 1997, 472), the Court granted a motion for a stay of execution in a lower court proceeding posing this issue. Stays of execution are granted if the legal question is open to significant doubt.