Reprinted from Tax Notes Int'l, June
27, 2011, p. 1018
On June 8 the German Ministry of Finance issued a circular
clarifying that transfers of intangible assets, such as goodwill or
customer lists, should be treated as a service for German VAT
The guidance is a reaction to the October 22, 2009, decision of
the European Court of Justice in Swiss Re Germany Holding
(C-242/08). The German Federal Tax Court had referred the case in
its decision of April 16, 2008, to the ECJ, asking specifically
whether the transfer of life insurance contracts constituted a
transfer of goods or a service for VAT purposes. (For the ECJ
decision, see Doc 2009-23447 or 2009 WTD 204-23;
for related coverage, see Doc 2009-23440 or 2009 WTD
The ECJ held that the transfer of life insurance or reinsurance
contracts qualifies as service and not as supply of goods because
the contracts do not constitute tangible assets under article 5,
paragraph 1 of the Sixth VAT Directive (77/388/EEC of May 17,
1977). Thus, the transfer of these contracts must be qualified as
cession of an intangible asset under article 6, paragraph 1 of the
In its guidance, the MOF follows the judgment of the ECJ and
extends the treatment to other intangible assets such as goodwill
or customer lists. The guidance will be applicable for all open
cases. However, for simplification purposes, it will be acceptable
for an entrepreneur to treat any transfers of intangible assets
occurring before July 1, 2011, as a supply of goods.
The treatment of the transfer of intangible assets as a service
will affect the possibility of VAT exemption. Under section 4, No.
28 of the VAT Act, the supply of goods that were previously used
solely for certain VATexempt purposes is itself VAT exempt.
However, this exemption will not apply when the transfer of
intangible assets qualifies as a service.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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