The German Ministry of Finance (BMF) has broadened the scope of the VAT relief for business transfers by focusing on the perspective of the buyer and the question if the assets enable him to continue a business (BMF, Schreiben v. 11.12.2013, IV D 2 – S 7100-b/13/10001, BStBl 2013 I S. 1625).

The application of the VAT relief for the transfer of a business as a going concern (TOGC) requires that a sale of assets constitutes a transfer of an entire business or a business unit. The recently amended provisions of the VAT application decree regulate that a business unit is given if the transferred assets enable the purchaser to operate them as a self-contained and independent business part. In contrast to the previous wording of the VAT application decree, in this context it shall apparently no longer be decisive whether or not the business unit has been already operated as an organizationally independent business part by the seller or not. This amendment of the VAT application decree refers to a ruling of the German Federal Tax Court dated 19 December 2012, XI R 38/10, and shows the tendency of the German tax courts and the German tax administration to broaden the scope of the transfer of a going concern, and rather to focus on the buyer’s perspective (and not so much on the seller’s anymore).