Section 2b UStG already came into force in 2017. However, a statutory transitional period, the ‘Corona Tax Assistance Act’ and a further transitional period give public authorities time to adapt their processes. The aim of the new regulation is to ensure that the definition of an entrepreneur for VAT purposes complies with European law and to avoid distortions of competition between public and private economic operators. As of 31.12.2024, jPdöR must now analyse their service exchange relationships: Which services are affected by the new legal regulation and which services will be taxed as before?
Biggest challenge: Evaluating the services
In order to categorise, municipalities (and other jPdöR) must assess service exchange relationships according to the criteria specified in the law. This includes, for example, categorising whether a service is
- represents an independent, sustainable activity to generate income</li
- is based on private or public law
- is in competition with other market participants
Evaluating all current and future services according to the specified criteria poses enormous challenges, particularly for local authorities. As every service is usually based on a contractual agreement, one key to overcoming this challenge is a transparent contract management system.
Contract management as a solution
Digital contract management systems improve the transparency of an organisation’s contract portfolio. All digital contract files are stored in a central database – uniformly structured and easy to find for authorised users. Metadata simplifies the filtering and categorisation of contracts and enables, for example, the search for specific contractual partners or filtering by contract type. With these functions, the user can filter certain contracts (e.g. telecommunications contracts) or certain contractual partners (e.g. energy suppliers) that are not relevant for an assessment in accordance with Section 2b UStG.
Special functions for greater efficiency
However, further special functions are advantageous for an efficient approach to the ‘Section 2b analysis’: otris contract contains a special Section 2b feature for the systematic review of the entire contract portfolio. In order to filter out the contracts that are affected by the new VAT regulations, the user first defines which parts of the contract portfolio are to be analysed (e.g. only certain contract types). The system then queries the relevant criteria for the selected contracts (e.g: ‘Is it a self-employed, sustainable activity to generate income?”). The user answers the questions via checkboxes. The system assesses whether a service relationship is subject to § 2b UStG. At the end there is a list of all contractual relationships that are taxed according to § 2b UStG. The responsible user evaluates new contracts directly when they are created in the system.
Your contact at otris
Is the implementation of § 2b UStG also an important topic in your administration? Are you looking for a tool that will help you to fulfil the requirements with a manageable amount of effort? Then we look forward to hearing from you by e-mail, telephone or by requesting a consultation.
Book an appointment
