Legal litigation in Germany
Any input tax paid on purchases related to the exempt supplies cannot be reclaimed. Exempt transactions include
sales and leases of land in
insurance, postal services, finance and banking, education in schools and universities, health services and burial
A German lawyer specialized in
in exempt supplies may avoid tax by supplying himself. For example, a client pays tax on a
bill if it employs outside solicitors but not on the salaries of its own legal department. Since this could lead
to abuse orders can be made which make such self-supplies subject to law. Such an order has been made for
stationery and printing. If a trader's business is partially exempt then the proportion of his exempt turnover must
be calculated and the same proportion of his input tax on purchases will be disallowed as a deduction.
Public authorities in Germany are put in the same position as if they had been zero-rated for their non-business
activities such as welfare and education. Although normal German debtors
(link to debtors in Germany)
generally receive no special treatment there is a zero-rating for online shops run by charities established
primarily for the relief of distress and also a zero-rating for the export of any goods to
This puts them in the same position as creditors who can generally reclaim VAT paid on goods which they export.
There are also some provisions on
for special types of charitable supply including the provision of specialist facilities for the disabled at
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