Cologne Higher Regional Court, 17.07.2017, Ref.: 22 U 60/16
In principle, an entrepreneur can claim the VAT invoiced to him for deliveries or other services by other entrepreneurs by way of input tax deduction (Section 15 (1) No. 1 UStG). In order to claim an input tax deduction, the entrepreneur requires an invoice that fulfils the requirements of Sections 14, 14a UStG. This includes, in particular, the invoice number, the invoice issuer and invoice addressee, the tax number or VAT identification number, the performance period of the invoiced service, the net amount, the VAT amount and the gross amount (Section 14 (4) UStG).
Facts of the Case:
Plaintiff is the landlord, defendants are tenants in this legal dispute
The plaintiff is the owner of a property from which he has let the rooms on the ground floor and the first floor to the defendants. The tenancy agreement was initially concluded for five years and includes the option to extend the tenancy for a further five years in each case by exercising an option right. Initially (from 1 April 2006 to 31 March 2011), the rent was EUR 7,400.00 plus ancillary costs and VAT; after the first extension, the rent was increased to EUR 7,600.00, i.e. to EUR 9,888.90 in total.
Tenants do not pay rent increase because landlord did not issue a proper invoice
Since the rent increase on 1 April 2011, the defendant initially continued to pay only the original rent of EUR 7,400.00. In February 2013, it informed the plaintiff that the reason for this was that it had not yet issued a proper invoice. After the plaintiff initiated dunning proceedings against the defendant in January 2015, the defendant paid the outstanding rent for 2011 plus default interest and legal fees (totalling EUR 2,996.52), as well as the outstanding part of the rent for the years 2012 to January 2015 plus VAT (totalling EUR 8,806.00).
With the action, the plaintiff demands, among other things, payment of EUR 1,078.71 plus interest of 8 percentage points above the respective base rate since 5 September 2014 as well as a further EUR 238 each since 7 October 2014, 7 November 2014, 5 December 2014 and 7 November 2015 (claim 2).
Lower court ordered tenant to pay rent concurrently against submission of a proper invoice - interest claim rejected
In its decision of 1 March 2016 (case no. 8 O 355/15), the Regional Court of Aachen ordered the defendant to make a partial payment of EUR 125.56 concurrently with the provision of a long-term rental invoice in accordance with the requirements of Section 14 UStG. The remainder of the claim was dismissed. The amount to be paid represents interest that was incurred due to the request to issue an invoice that was only made in February 2013. The plaintiff then lodged an appeal against the rejection of the aforementioned application for payment (claim 2) with the Higher Regional Court of Cologne.
Judgement of the Cologne Higher Regional Court:
OLG also denies interest claim as no proper invoice was issued
In its decision, the Higher Regional Court of Cologne states that the appeal lodged will be admissible but unfounded. In its decision, the Court of Appeal shows that the plaintiff has no claim under Sections 280 (1), (3), 268, 288 BGB, as the defendant was not in default as of February 2013. Since February 2013, the defendant has had a right of retention to the rent under Section 273 BGB until an invoice corresponding to Section 14 UStG is issued.
The parties have agreed in their rental agreement that the defendant has to pay rent plus advance payment of operating costs plus VAT. Based on this provision, the defendant is entitled to a VAT invoice. This is because if the parties agree that the tenant should pay VAT and the landlord of commercial premises has opted out, the tenant requires an invoice within the meaning of Section 14 UStG in order to assert the VAT paid by way of input tax deduction in accordance with Section 15 (1) No. 1 UStG.
Tenants are entitled to receive a proper VAT invoice
According to this, any document from which the supplier, the recipient, the quantity and type of service, the period of the service and the amount of VAT due on the payment can be recognised can be considered an invoice. Consequently, the minimum information specified in Section 14 (4) UStG must be complied with.
Therefore, in principle, the rental agreement itself is also sufficient as a "standing invoice", provided that all details are contained in it or several documents, provided that they refer to each other. In the present case, the rental agreement did not include the plaintiff's VAT identification number, meaning that the rental agreement did not constitute a proper invoice in accordance with Section 14 UStG.
Issuing the invoice is a secondary obligation under the rental agreement
The invoice constituted a contractual ancillary obligation, so that the tenant had a claim to its preparation on the basis of his legitimate interest under Section 15 UStG. Due to the landlord's breach of secondary obligations, the defendant is entitled to a right of retention pursuant to Section 278 BGB, which precludes a debtor's default.
Consequently, the OLG Cologne summarises that the tenant who wishes to claim input VAT deduction is entitled to the preparation of a rental period invoice in accordance with §§ 15 para. 1 sentence 1, 14 UStG, provided that the rental agreement does not contain the corresponding information of § 14 para. 4 UStG.
Source: Higher Regional Court of Cologne
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
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