Press Release: VAT- Commission tackles Germany over taxation of withdrawals for private use of immovable property from business assets

On 31 January, 2008, the European Commission decided to send Germany a formal request to change its law regarding the VAT taxation of withdrawals for private use of immovable property from business assets. The withdrawal of land or buildings from business assets is subject to VAT pursuant to German administrative instructions while the Commission opines that they should be VAT exempt. The Commission's request is in the form of a Reasoned Opinion, the second stage of the infringement procedure under Article 226 of the EC Treaty. If the relevant rules are not amended within two months in order to comply with the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.