Germany Fiscal Court Clarifies Input VAT Adjustment Upon Repaying Import VAT to Insolvency Estate

The German Federal Fiscal Court Oct. 23 posted online Decision No. XI R 7/22, clarifying an input VAT adjustment upon repaying import VAT in insolvency proceedings. The taxpayer, a company, sought to adjust its input VAT deduction upon repaying import VAT into an insolvency estate, and argued that the repayment shouldn’t affect the deduction. On appeal, the Federal Fiscal Court held that: 1) repaying import VAT into the insolvency estate triggered a mandatory adjustment of the input VAT deduction; 2) a deduction without a corresponding tax burden would unfairly benefit the taxpayer and violate EU principles of equal treatment; and ...