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In a decision dated 13 March 1997 (DStR 1997, 886), the Federal Tax Court held that the sale of standard software by a distributor is subject to the standard VAT rate (currently 15 %). The sale of the operating manual is subordinate to the sale of standard software and assimilated to it.
The grant and transfer of rights under the copyright law would be subject to the reduced VAT rate (currently 7 %). It is still unclear whether the development and sale of individual software falls under this category or not. In a decision of even date with the preceding one (DStR 1997, 472), the Court granted a motion for a stay of execution in a lower court proceeding posing this issue. Stays of execution are granted if the legal question is open to significant doubt.
This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. We in particular insist that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While our articles are carefully reviewed, we can accept no responsibility in the event of any inaccuracy or omission. Please note the date of each article and that subsequent related developments are not necessarily reported on in later articles. Any claims nevertheless raised on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Deutsche Treuhand-Gesellschaft AG (KPMG Germany). Distribution to third persons is prohibited without our express written consent in advance.
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