According to a decision by the Federal Fiscal Court (judgment of Oct. 24, 2013 – V R 31/12), a business owner subject to estimated taxation is already required to adjust the sales tax for the advance return period in which the service was provided, pursuant to § 17 of the German Sales Tax Act (UStG) due to uncollectibility is entitled, to the extent that his claim for payment is subject to a contractual retention to secure warranty claims over a period of two to five years cannot achieve.
Bank guarantee: However, to the extent that the contractor is entitled to full payment at the time the services are rendered because he has assigned the warranty claims of his service recipients
- has secured it with a bank guarantee, or
- he was able to provide such a guarantee,
lies, on the other hand, no uncollectibility The business owner must provide evidence that the conditions for a reduction in the tax base due to uncollectibility have been met.
Burden of Proof: The supporting documents must clearly and unambiguously show that, for each contract concluded, specific warranty bonds—each one specifically requested by the contractor—were applied for and rejected.
Conclusion: To the extent that the business owner, under the aforementioned conditions, properly treats the claims for payment as uncollectible, the Beneficiary to adjust the input tax on the respective purchases of services accordingly. The business owner is not required to inform the recipient of the service of how his or her claims are being handled. The However, the entrepreneur's tax office is authorized to, to inform the recipient's tax office that the outstanding claims for payment are to be treated as uncollectible (Section 17.1, Paragraph 5, Sentences 9 and 10 of the VAT Implementation Guidelines).