Exemption from VAT for Care and Support Services in Germany

• Budget assistance services in the field of care and support, paid for by severely disabled clients from their “personal budget,” are not exempt from VAT.
• The court ruled that the services provided by the plaintiff are not considered exempt from VAT because they do not meet the legally required cost coverage ratio for recognized social institutions.
• The plaintiff argued that his budget assistance services should be exempt from VAT as they are closely related to the operation of facilities for the care or support of physically, mentally, or emotionally needy individuals.
• However, the court determined that the plaintiff is not recognized as a social institution because his budget assistance revenues did not meet the legally required social threshold.
• The court concluded that the conditions for VAT exemption were not met.
• A new provision in the 2020 Annual Tax Act recognizes institutions with agreements for care counseling under § 7a SGB XI as institutions with a social character.
• The case has been allowed for revision at the Federal Fiscal Court (BFH) due to a pending procedure.
• The Hessian Fiscal Court has ruled that the dependency of VAT exemption on whether the care costs have been reimbursed by social welfare authorities in at least 25% of cases is constitutional and in line with EU law.

Source: haufe.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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