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The Commission decided on March 8 to send a letter of formal notice to Germany in relation to its application of a specific VAT scheme for farmers. EU rules (the VAT Directive) allow Member States to apply a flat-rate VAT scheme for farmers. Under this scheme, farmers charge their customers a standard amount – or ‘flat-rate compensation' - on their agricultural products and services, instead of applying the normal VAT rules. In turn, those farmers cannot claim compensation for VAT they have already paid. The scheme is supposed to be used by farmers who are likely to experience administrative difficulties when following normal VAT rules. However, Germany applies the flat-rate scheme by default to all farmers, including owners of large farms who would not encounter any such difficulties.
In addition, according to figures from the German Supreme Audit Institution (in German: Bundesrechnungshof), according the flat-rate in this way to farmers results in overcompensation for the input VAT that they have paid. This is not allowed under EU rules and generates major distortions of competition in the internal market.
If Germany does not act within the next two months, the Commission may send a reasoned opinion to the German authorities.
Thursday Marchh 8, 2018/ EC( European Union.
http://europa.eu/rapid
