The regulations in § 14c UStG (German VAT Act) regarding incorrect or unauthorized VAT invoicing are based on Article 203 of the VAT Directive (MwStSystRL). Unlike the German regulations, Article 203 does not differentiate between different scenarios but states that VAT is owed by any person who invoices this tax in an invoice.
The Federal Fiscal Court (BFH) ruled in December 2018 that the tax liability under § 14c UStG also arises when issuing an invoice to a non-entrepreneur. However, the European Court of Justice (ECJ) ruled in December 2022 that if a taxpayer issued an invoice with a VAT amount calculated based on an incorrect tax rate, and there is no risk to the tax revenue because the service was provided exclusively to non-taxable end consumers, then the taxpayer does not owe the incorrectly invoiced VAT.
Based on these rulings, it is determined that if an entrepreneur issued an invoice with an incorrect VAT amount to an end consumer, no tax arises under § 14c Abs. 1 UStG. However, the principles of the ECJ ruling do not apply to other cases covered by § 14c Abs. 2 UStG, where the fundamental conditions of the ECJ ruling are not met.
Regarding the recipient of the invoice, if the conditions for applying the principles of the ECJ ruling are met for the issuer of the invoice, it must also be checked whether the conditions are met for the recipient of the invoice. The ECJ ruled that there should be no risk to the tax revenue if the recipient has the right to deduct input tax or could exercise this right.
The Umsatzsteuer-Anwendungserlass (German VAT guidelines) will be amended to reflect these rulings and clarify the application of the principles.
These principles apply to all open cases.
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