Update 11/25/2022: As part of the Annual Tax Act 2022, the deadline for mandatory application of § 2b UStG is expected to be extended until 01/01/2025.
Initial situation
Due to the reform of the entrepreneurial status of legal entities under public law (jPöR) with the introduction of the new § 2b UStG, all activities of a jPöR must be reassessed from a VAT perspective by 31 December 2022 at the latest and new activities must be classified under the taxation regime of § 2b UStG from 1 January 2023.
Significant expansion of the entrepreneurial sphere through § 2b UStG
Our experience in the context of conversion projects in this regard shows that the entrepreneurial area of the jPöR will grow significantly.
Under the taxation regime of the previous § 2 para. 3 UStG, an average of 7% of the activities of a jPöR were to be classified as relevant for VAT purposes. Through the application of § 2b UStG, this share will increase to an average of 33%.
Consequently, considerably more activities and facts have to be declared in the advance VAT returns and annual returns:
Our study shows that the new regulation increases the number of tax-exempt activities of the entrepreneurial sector relevant for VAT tenfold on average. The number of taxable output sales increases on average by a factor of 4.
Thomas Schmidt
Director, Tax, Steuerberater
KPMG AG Wirtschaftsprüfungsgesellschaft
Impact on the entire organisation
For many jPöR, there is another complicating factor: Whereas activities relevant for VAT purposes were previously limited to commercial operations and thus easily delimited to individual organisational units, in the future VAT-relevant circumstances will occur across all organisational units. In order to be able to recognise such VAT-relevant activities in the most diverse organisational units, there is often a lack of resources with the necessary tax knowledge in the individual organisational units.
Making complexity controllable - avoiding mistakes
The expansion of the entrepreneurial sphere to the entire organisation of a jPöR increases the complexity and the susceptibility to errors. jPöR are confronted with the challenge of identifying and implementing appropriate countermeasures.
Training measures as a target-oriented means
In order to facilitate the conversion to § 2b UStG and to sensitise the affected employees of the individual organisational units to VAT, training measures across the entire organisational structure can be particularly effective.
It is not necessary to train all employees to become "tax experts" who master every facet of the legal regulations. Rather, it is important to create a basic understanding among the staff in order to be able to recognise tax-relevant activities and related information more easily, comprehensively and without errors. If this works, the internal tax function can determine the tax status in a targeted manner and minimise compliance risks in the regular operation of § 2b UStG.
Organisational effort and costs usually play an important role in the selection of suitable training measures. With increasing size of the organisation and number of persons to be involved, both factors usually increase rapidly.
E-training as an efficient tool
E-training - i.e. virtual training programmes - is an efficient and, from a certain number of affected employees, also cost-effective option for comprehensive training. The organisational effort of classroom training is eliminated and employees can complete the training individually according to their time availability and preference.
Practical e-training from KPMG & WTT Campus One (in German only)
In order to meet the requirements of the new § 2b UStG, to facilitate the changeover and to make employees fit for the new VAT tasks, KPMG has developed the virtual training "VAT for municipalities" together with WTT Campus One, a multiple award-winning provider of innovative e-training. The training programme uses entertaining and intuitive didactic methods as well as practical examples to impart relevant specialist knowledge on § 2b UStG. You can get an insight into the training on the page "Virtual learning that is fun" on the KPMG Internet - and if you are interested, we look forward to hearing from you.
