ARTICLE · 10 AUGUST 1999

180. Selected VAT Developments

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1. Input tax credit for VAT incorrectly charged or overstated

The Federal Tax Court held in a 1998 decision (BStBl II 1998, 695) that VAT separately shown in an invoice may only be deducted as input VAT by the recipient of the related supply if the VAT shown is owed in fact. This means that the input tax credit is no longer available in particular in the situations covered by § 14 (2) UStG.

The Federal Tax Court based this aspect of its ruling on the case law of the European Court of Justice (decision of 13 December 1989, Genius Holding BV – UR 1991, 83). The tax authorities have issued two administrative orders in response to the Federal Tax Court decision (OFD Nuremberg, Vfg. of 16 November 1998 - DStR 1998, S. 1919; OFD Düsseldorf, Vfg. of 24 September 1998 - UR 1998, 479).

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