Guidance issued on application of reverse charge for supplies of certain metals

The Ministry of Finance has issued guidance on the newly introduced reverse-charge mechanism for supplies of precious metals, metal, selenium and cermets

 Effective 1 October 2014, the German Ministry of Finance (BMF) extended the application of the reverse charge mechanism to supplies of precious metals, metals, selenium and cermets.

The scope of affected products is based on the classification in the Combined Nomenclature Tariff and includes:

• Silver, gold, platinum
• Iron: powder, blocks or other products, etc.
• Copper: powder, pols, sheets, bands, etc.
• Aluminum: powder, pols, sheets, bands, foil, etc.
• Lead, zinc, tin: profiles, wire, pols, sheets, etc.

In general, waste and scrap from the above materials are not subject to the reverse charge on supplies of metals, although it may apply on supplies of waste and scrap based on attachment 3 of the German VAT Act.

It appears that not all metals are affected by the new rule (e.g. the supply of iron screws generally is not affected, but the supply of steel wire is), which could create some uncertainty for businesses.

The BMF, however, has rejected a proposal to introduce a value threshold that would exclude minor supplies from the application of the reverse charge.

Further, the BMF has granted a non-objection period until 31 December 2014.