VAT update - § 2b VAT taxation of public authorities

Why was §2b of the Value Added Tax Act introduced?

• Conflicts of interest between public institutions and the private sector.
• Distortion of competition if services provided by the public sector that are comparable to those of private providers are not subject to VAT.
• Compatibility with the principles of the harmonized VAT system within the European Union.

Clarification of entrepreneurial status

• Previous regulation § 2 para. 3 UStG compared to the new § 2b UstG.

What will be subject to VAT in the future?

• Check scheme for sales taxation.

Application of § 2b UStG

• When are public sector services subject to VAT?
• Delimitation, assistance services, sovereign activities, distortion of competition.
• Transitional regulation.

Requirements for input tax deduction

•  Effects of § 2b UStG.
•  Assignment principles for the purchase of input services.
•  Allocation of input tax for mixed use.

News from case law and administration

• In particular, the BMF letter of 12.06.2024 on input tax deduction for legal entities under public law operating as businesses.

Space for individual questions on the topic