The Federal Fiscal Court of Germany published Decision No. VR 39/20 on 3 December 2021. The court ruled that self-employed teachers providing services for schools as independent teacher are not VAT exempt. Freelancers are only exempt from trade tax (Gewerbesteuer), and not from value-added tax (Umsatzsteuer or Ust).
The decision of the Court
The self-employed teacher conducted classes for specific education courses. The fees for the classes and seminars were taxed a reduced rate of 7% VAT. German tax authorities determined that the services should have been subject to the standard VAT rate. The teacher claimed that the courses offered were VAT exempt services since the training given is for professional use, however the court rejected the appeal. The services of private schools and other general or vocational institutions that are directly used for school and educational purposes are VAT exempt only if they are state approved as substitute schools.