The demarcation between compensation for damages and consideration for supplies rendered, has been an ongoing issue in daily practice. According to sec. 1.3 para. 3 of the German VAT Circular, contractual penalties, inter alia, are deemed to be compensation for damages rather than consideration for supplies. The ECJ is now narrowing this view. In its judgment of 20 January 2022, (C-90/20 – Apcoa Parking Danmark A/S), it ruled on a case concerning the use of a private sector parking space. If a motorist violates the general conditions of use when using a parking space and, as a result, is required to pay an (additional) amount of money, the ECJ considers this to constitute consideration for a supply of service, subject to VAT, for the specific use of the parking space.
Source: kmlz.de
