133. VAT Rate For Individualised Software

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In a judgement which was apparently not appealed and has become final, the Hamburg tax court has held that the licensing of individualised software for use by a customer is subject to the full VAT rate (previously: 15 %; from April 1998 onwards: 16 %). The reduced VAT rate of 7 % is not applicable because, in the court's view, the supply does not constitute a grant of rights under the copyright act within the meaning of sec. 12 (2) no. 7 (c) UStG (decision of 22 May 1997 - EFG 1997, 1557).

The court admits that software licensing agreements typically involve grants of rights protected by the copyright act to some extent. For instance, the mere loading of software into a computer's random access memory is a form of reproduction and is prohibited without the consent of the copyright owner. However, the main focus of