German VAT supply of labour rules to change

The European Court of Justice (‘ECJ’) has ruled that Germany should change its VAT rules on the supply of labour. The Court is the highest jurisdictional body for European VAT, and so the German authorities will now be required to adjust their tax legislation within the forthcoming months.

The ruling, issues on 26 January 2012, has brought into the European VAT Directive (2006/112)’s definition of the supply of labour the provision self-employed workers.

The purpose of this ruling is to improve the 27 European Union member states’ consistent application of tax rules towards the furtherance of the Single Market objectives.

German VAT is charged at 19%, and is one of the lowest in the EU.