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ECJ rules on German services fiscal neutrality question

  • Mar 12, 2014 | Richard Asquith

ECJ rules on German services fiscal neutrality question

The European Court of Justice (ECJ) has ruled that European tax authorities should provide equal VAT treatments to providers of similar services  to key customers even where those providers may otherwise generally provide services with differing terms.

German VAT on taxi services

The two, linked cases concerned the VAT treatment differences between licensed taxi operators  vs minicab operators, and whether they can provide the 7% reduced German VAT rate on certain services.  Under current German VAT compliance rules, mini cab services are charged at the standard 19% German VAT rate, but licensed taxi benefit from the reduced 7% rate.

A mini-cab provider, ProMed, argued that under the special terms of a  contract with an insurance company, it was providing a comparable taxi service, but the German courts held that it had no such authority.  The ECJ has now found in favour of ProMed on the basis that there was not material differences in the service and the German VAT legislation could not artificially create such a categorisation for tax purposes.  The ECJ made the same decision for another mini-cab firm run by Karin Oerel.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.