Changes to Tax Laws due to the so-called "Croatian Act"

On July 11 2014, the Bundesrat (German Federal Council) approved the act for the adjustment of the national taxation law to reflect the accession of Croatia to the EU and to amend other tax provisions.

New VAT regulations on electronic services:

Up to now, services delivered to private customers via telecommunications, radio, television and other electronic means within the European Union, are subject to VAT in the country in which the company that supplies said service is based. This applies, for example, also for the large providers of music, e-books, apps and films via internet downloads. As of the coming year, these sales are to be taxed in Germany if the customer lives in Germany.

In principle, entrepreneurs offering such services must therefore register as being turnover-tax relevant and comply with their registration and reporting obligations. As an alternative they may use the simplified One-Stop-Shop procedure. This simplified procedure applies in all EU countries from January 1 2015 on. Companies in Germany can then report their corresponding sales in the remaining EU member countries electronically and accordingly pay them all , through the German Federal Central Office (Bundeszentralamt für Steuern, BZSt). Participation in the simplified procedure can be applied for, as of October 1 2014, which takes effect on January 1 2015 and applies to all EU member countries. The BZSt provides under an online portal for German entrepreneurs.

Again changes in the tax liability of the recipient for construction services:

According to a decision by the Federal Finance Court on August 22 2013, the regulations pertaining to the tax liability of the recipient of construction and cleaning services are to be interpreted restrictively. This means that the emergence of a tax liability depends on whether the benefit recipient uses for his part, the work performed or other services that serve the purpose of production, repair, maintenance, alteration or removal of buildings. It does not depend on the fraction of the entire taxable amount for construction work or other services carried out by the benefit recipient. The fiscal administration initially shared this view.

The so-called Croatian Act restores the current administrative perception as of October 1 2014. The regulation that the reverse-charge method is only applicable if the benefit is received when construction work is anew carried out is thus changed again. Subsequently, furnishing sustainable construction work is called for. As proof, the fiscal authorities provide the benefit recipient with a valid certificate at the time the business is conducted. Its validity shall have a 3-year restriction and can only be rescinded with effect for the future. For the issuance of the certificate, the fiscal authorities orientate themselves on the 10% threshold.  

Sale of life insurance will become taxable:

After the sale of a life insurance, the payment is no longer exempt from taxes upon the materialisation of the risk. No tax obligation exists upon transference in connection with divorce or inheritance.

Further changes:

Among the numerous tax law changes is the clarification, that there is no tax exemption for the sale of dividend rights before the dividend record date. Changes also pertain to foreign currency transactions; tax-planning models facilitated by relocating to a foreign country are prevented. A further change affects maintenance payments to supported people. In the future, the tax identification number of all maintained persons must be provided so that their identity is proven beyond doubt