24.02.2015BFH rules on VAT impact of discount granted by foreign company
No input VAT correction required at the level of the last recipient in case of cross-border rebates earlier in the supply chain.
In a decision dated 4 December 2014, the Federal Tax Court (BFH) held that a discount received by the final recipient in a supply chain from the first supplier that is established in another EU member state does not require the recipient to correct its input VAT deduction.
In the underlying case a company supplied goods from the UK to a distributor in Germany who supplied the goods onwards to a local retailer. No VAT has been charged on the zero-rated intra-community supply from the UK company to the distributor while the distributor declared the intra-community acquisition in Germany and charged German VAT on the local supply to the retailer. Subsequently, the retailer received a discount directly from the UK company.
The BFH now stated that the discount received does not affect the recovery of input VAT by the retailer from the invoices issued by the distributor as the taxable base for this supply has not changed due to the discount granted by an earlier supplier in the chain that relates to a zero-rated supply.
The input VAT refund from the intra-community acquisition by the distributor in Germany does according to the BFH also not have to be amended.
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