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BFH rules on VAT treatment of transfers of co-ownership shares in goods
Transfer of co-ownership shares in goods may be considered a supply of goods potentially qualifying for the VAT exemption for intra-community supplies
In a decision dated 18 February 2016, Germany’s Federal Tax Court (BFH) ruled that a sale of co-ownership shares in goods may be considered a supply of goods for VAT purposes.
With this decision, the BFH abandoned its own jurisprudence and contradicts the current practice of the German tax authorities of considering the transfer of co-ownership shares in goods as supply of services.
The BFH held that a transfer of a 50% share in an old and valuable book may be treated as a supply of goods. The supply can qualify for the VAT exemption for intra-community supplies provided the good in which the co-ownership was transferred is shipped to another EU member state immediately after the sale.
It is unclear whether and how the German tax authorities will apply the decision, so taxpayers holding co-ownership shares should monitor potential changes.