Tax law. The deduction of input VAT on basis of a construction work invoice containing an abstract service description of the executed work can be sufficient if it is apparent to which specific construction project the invoice relates.
Judgement of the Federal Fiscal Court (BFH) dated 15 October 2019, ref. V R 29/19 (formerly V R 44/16)
The Case
A service company in the industrial sector claimed input VAT from construction work invoices. The financial authorities, however, denied the input VAT deduction as the invoice details were allegedly not specific enough. On the one hand the financial authorities presumed a lack of information re the dimensions of the constructed object. On the other hand the invoice presumably did not include the exact execution date of the construction work. The company, however, stated that the invoice details were sufficient as the construction project could be verified from the other details of the invoices and the date of the construction work was indicated by the date the invoice had been issued. The Federal Fiscal Court confirmed the company’s opinion.
The consequences
Section 14 of the German VAT Code (UStG) sets out the invoice details required for a deduction of input VAT. These details are mandatory in order to put the tax authorities in a position to identify and check the invoiced services properly. According to the Federal Fiscal Court it shall, however, be sufficient if the details enable the tax authorities to easily identify the invoiced services. Therefore, an exhaustive description of the invoiced services was not deemed necessary. In the case at hand, these requirements were met as the overall invoices gave enough details about the specific building project and the place of its execution. With regard to the date of the executed services, the Federal Fiscal Court continues its previous case law (Ref. V R 18/17). If the invoice is being issued immediately after the building has been finalized and approved, as is customary in the building industry, the date of the execution of the construction work corresponds to the date of the invoice and, therefore, is sufficient, unless apparently indicated otherwise.
What is to be done?
The Federal Fiscal Court confirms that service descriptions must indeed be specified in the relevant invoice and that it is not sufficient to merely state a service category. Therefore, the invoice should always set out the required additional information. Please note, that even the calendar month in which the service was rendered can be a sufficient execution date. Therefore, the Federal Court of Finance allows invoices re construction works to be issued without a specific execution date, if it can be assumed that the work was performed in the month in which the invoice was issued. However, in order to avoid risks we recommend to always set out a specific execution date or at least the addition “date of execution equals date of issued invoice”.
Lawyer and tax consultant Isabel Tannenberg of KUCERA.
