The Federal Ministry of Finance (BMF) has again commented on the reverse charge mechanism in case of construction services as per paragraph 13b section 5 set 2 combined with section 2 no. 4 German VAT Act (letter from July 26, 2017 – III C 3 – S 7279/11/10002-09 – IV A 3 – S 0354/07/10002-10). On February 23, 2017 the Federal Fiscal Court (BFH) had decided that the correction of the VAT assessment in case of construction services regulated in paragraph 27 section 19 VAT Act is in line with the German constitution under consideration of certain requirements. The letter from the Federal Ministry of Finance comments on the consequences of the judgement related to the following aspects:
- Taxation of the entrepreneur performing the services
- Procedural settlement of the applications by the recipient of the services to amend VAT assessments
- Interest on arrears of tax according to paragraph 233a AO (German Fiscal Code)
- Assignment of civil law claims within the tax authorities
- Modification of the VAT application decree
- Final clauses
Source: nwb