Online message – Thursday 06/22/2023
sales tax | Preliminary costs in connection with the delivery of cattle for slaughter, market fees of a producer cooperative (BMF)
The BMF has commented on the VAT treatment of so-called preliminary costs in connection with the delivery of cattle to slaughterhouses and on the treatment of so-called marketing fees from producer organizations in the fruit and vegetable sector and has adjusted the UStAE accordingly (BMF, letter of June 20th, 2023 – III C2-S7200/19/10006:001).
background: The BFH in its decision of 10/11/2022 – XI R 12/20 (NV), decided that a
Schlachthof carries out activities in the run-up to the transfer of ownership under civil law when cattle are delivered in their own interest. Merely passing on the so-called preliminary costs for these activities to the suppliers of the animals does not lead to an exchange of services.
By decision of September 13, 2022 – XI R 8/20, BStBl II 2023 p. XXX (see our online message of December 22, 2022 with annotation
Neck), the BFH decided that in the event that a Food producer cooperative buys from its members in their capacity as producers and delivers this food to buyers in their own name and on their own account, so-called market fees, which the producer cooperative deducts from the purchase price to be paid to the producers, are not to be regarded as payment for a marketing service.
The BFH says no according to margin no. 23 of the above resolution, a marketing service provided by the producer organization to the respective farmers that is subject to the standard tax rate means that marketing the products it sells in its own name would be primarily in its own interest. As a result of the cooperative’s activity in central marketing, it can be assumed that it can achieve higher sales prices for the goods.
Accordingly, the following paragraph 26 is added after Section 1.1 Para. 25 UStAE:
So-called market fees, which a producer organization collects from its members when buying food for the marketing of the food, do not represent payment for any other service provided by the producer organization, but reduce the assessment basis for the deliveries of the members to the producer organization if the expenses on which these costs are based are in own interest of the producer organization (cf. BFH, decision of September 13, 2022 – XI R 8/20, BStBl II 2023 p. XXX).
A slaughterhouse that, when purchasing animals intended for slaughter, covers the costs incurred during the slaughter (so-called preliminary costs, e.g. the costs for quality management including costs for the veterinarian, for inspecting the customer’s operations, for compliance with the increased hygiene regulations and the costs for ensuring the traceability of the animals) from the purchase price for the respective animal, does not provide any other services to the suppliers of the animals if the processes underlying these costs are also in the own interest of the slaughterhouse. In this case, too, there is a reduction in the payment for the delivery of the animals.
A notice:
The principles of writing are to be applied in all open cases
For the period up to the publication of this letter, no objections will be raised if the onward charging of the preliminary costs has been treated differently from Section 1.1 Para. 26 UStAE.
Those: Federal Ministry of Finance, letter from 20.6.2023 – III C 2 – S 7200/19/10006 :001, published on the
Federal Ministry of Finance website (il)
Source(s):
NWB GAAAJ-42494