Reemtsma Direct Claim in VAT Law
The so-called Reemtsma direct claim has gained considerable clarity through several decisions of the fiscal courts and current proceedings before the Bundesfinanzhof (BFH, Federal Fiscal Court). The central question is the circumstances under which a recipient of supplies may seek a refund of wrongly paid VAT not from the supplying trader, but directly from the tax authorities.
Of particular significance are the decisions of the FG Niedersachsen (Lower Saxony Fiscal Court) of 15 August 2024 – 5 K 40/22 and of the FG Baden-Württemberg (Baden-Württemberg Fiscal Court) of 6 December 2023 – 14 K 1423/21 and of 9 April 2025 – 14 K 21/24. On key points, the fiscal courts are taking a position contrary to the administrative view set out in the BMF-Schreiben (Federal Ministry of Finance letter) of 12 April 2022, reference III C 2 – S 7358/20/10001 :004, published in BStBl. (Federal Tax Gazette) 2022 I p. 652, which amends section 15.11 UStAE (German VAT Application Decree).
According to the more recent case law, a direct claim may in particular already come into consideration upon the opening of insolvency proceedings over the assets of the supplier or where the supplier has no assets. It is therefore not mandatory to wait until the insolvency proceedings have been concluded. The limitation of the civil-law repayment claim against the supplier may also give rise to a direct refund claim against the Treasury if the other requirements are met.
Initial Situation in the Case of Incorrectly Stated VAT
The starting point is a situation in which the supplying trader separately states VAT in an invoice although it was not owed in that form. The recipient of the supply pays the gross amount to the supplier and claims the stated VAT as input tax. Later, the tax office denies the input tax deduction because the VAT was owed not by the supplier, but by the recipient of the supply under statutory provisions.
A typical case concerns construction services within the meaning of § 13b Abs. 2 Nr. 4 Satz 1 UStG (German Value Added Tax Act). If the recipient of the supply is the person liable for the tax under § 13b Abs. 5 Satz 2 UStG, the supplier’s separate statement of VAT results in an incorrect statement of tax within the meaning of § 14c Abs. 1 UStG.
Under civil law, the primary recourse is generally against the supplying trader. The supplying trader would have to correct the invoice and repay the VAT wrongly collected to the recipient of the supply. In practice, however, this route may be blocked, for example if insolvency proceedings have been opened over the supplier’s assets or if the civil-law claim can no longer be enforced.
Development of the Direct Claim in Case Law
Under § 15 Abs. 1 Satz 1 Nr. 1 Satz 1 UStG, only VAT that is legally owed may be deducted as input tax. This legal position is consistent with EU law and has already been confirmed by the case law of the EuGH (Court of Justice of the European Union, CJEU), including in the Genius Holding case.
In the Reemtsma Cigarettenfabriken decision, the CJEU made clear that national rules may in principle provide that the supplier claims the refund of wrongly paid VAT from the tax authority and that the recipient of the supply pursues its repayment claim against the supplier under civil law. At the same time, however, national law must ensure that the recipient of the supply receives a refund of the VAT wrongly invoiced and paid if repayment by the supplier is impossible or excessively difficult.
This gives rise to a corrective mechanism shaped by EU law. The Treasury should not retain VAT amounts that were not materially owed if the recipient of the supply cannot obtain an effective refund by other means.
Requirements of the Reemtsma Direct Claim
Incorrect Statement of Tax in an Invoice
According to the case law, the direct claim requires that VAT was wrongly separately stated in an invoice for a supply that has already been made or is yet to be made. The BFH emphasised this again in its judgment of 5 December 2024 – V R 11/23, published on 24 April 2025.
If there is no such statement of tax in an invoice, the direct claim is excluded. In this sense, the Hessisches FG (Hesse Fiscal Court) also denied a direct claim in its judgment of 13 March 2023 – 6 K 1284/21 because the required statement of tax was missing.
Payment to the Supplier and Remittance to the Treasury
The recipient of the supply must have paid the VAT to the supplier. In addition, the supplier must have remitted the VAT to the Treasury. The state is not obliged to refund amounts that it has not received.
In practice, it may be disputed whether and in what amount the supplier declared or remitted the VAT in question. This information is regularly part of the tax relationship between the supplier and its tax office. The recipient of the supply typically has neither the supplier’s tax returns nor proof of payment.
The tax authorities must investigate the facts ex officio under § 88 Abs. 1 AO (German Fiscal Code). In doing so, circumstances favourable to the taxpayer must also be taken into account. According to the view presented, the recipient of the supply does not bear the burden of establishing negative requirements such as abuse, fraud, negligence or the Treasury’s loss of enrichment.
No Enforceable Repayment Claim Against the Supplier
The core of the direct claim is that the recipient of the supply can no longer effectively recover the wrongly paid VAT from the supplier. According to the CJEU case law, this is the case where the refund is impossible or excessively difficult.
This requirement may be met in particular in the following categories of cases:
- opening of insolvency proceedings over the supplier’s assets,
- lack of assets and deletion of the supplier from the register,
- limitation of the civil-law repayment claim if the limitation defence is raised and the other requirements are met.
Insolvency of the Supplier and Lack of Assets
No Mandatory Need to Await Completion of the Insolvency Proceedings
According to the more recent fiscal court case law, where the supplier is insolvent, the recipient of the supply does not first have to wait for the conclusion of the insolvency proceedings. The opening of insolvency proceedings may already make recovery from the supplier impossible or excessively difficult.
In its judgment of 6 December 2023 – 14 K 1423/21, the FG Baden-Württemberg held that, in the event of the supplying trader’s insolvency, the recipient of the supply is not required first to register its claim in the insolvency schedule and wait to see what fraction of its claim will be satisfied in the insolvency proceedings. In the case decided, the insolvency administrator had indicated that an insolvency dividend of 0% was to be expected. The court rejected the contrary administrative view in paragraph 11 of the BMF letter of 12 April 2022 as contrary to EU law.
The judgment was made public by notice of 23 October 2025. The claimant was a stock corporation based in Switzerland which, in the years in dispute 2010 and 2011, had settled accounts under the self-billing procedure with German VAT for supplies made by a German trading company that later became insolvent.
An appeal on points of law against this judgment is pending before the BFH under case reference V R 31/24. The BFH has scheduled an oral hearing for 19 November 2026 at 11:00 a.m. The subject matter is the principles for handling the direct claim under European law as an equitable measure pursuant to § 163 AO in insolvency cases.
No Requirement to First Register the Claim in the Insolvency Schedule
According to the FG Baden-Württemberg, the recipient of the supply is not required first to register its claim in the insolvency schedule and wait to see what fraction of its claim will be satisfied in the insolvency proceedings. This view contrasts with the administrative position, which imposes narrower limits on the direct claim in insolvency cases.
The FG Baden-Württemberg continued this line in its judgment of 9 April 2025 – 14 K 21/24. That case also concerned the question whether, before asserting the direct claim, the recipient of the supply must wait for the conclusion of the insolvency proceedings and for the dividend. An appeal on points of law against this decision is pending before the BFH under case reference V R 25/25. The oral hearing initially scheduled for 19 November 2026 at 1:00 p.m. was moved to 26 November 2026 at 1:00 p.m.
Deletion of the Supplier Due to Lack of Assets
In its judgment of 15 August 2024 – 5 K 40/22, the FG Niedersachsen upheld a direct claim in a situation in which the supplying trader had been deleted from the register due to lack of assets. The court considered the requirements of the Reemtsma case law to be met because a refund from the supplier was no longer obtainable.
Proceedings concerning this case are also pending before the BFH and are listed in the court’s current hearing notices. The final clarification by the highest court of the scope of the direct claim in cases of limitation and lack of assets therefore remains open.
Civil-Law Limitation of the Repayment Claim
In proceedings brought by a German farmer and forester as claimant in the main proceedings, the CJEU clarified the significance of civil-law limitation for the direct claim in its judgment of 7 September 2023 – C-453/22. According to that judgment, EU law requires that the recipient of the supply have a direct refund claim against the tax authority if, because of national limitation rules, it can no longer claim the wrongly paid VAT from its suppliers, provided that it cannot be accused of fraud, abuse or negligence.
The FG Münster (Münster Fiscal Court) had referred the matter to the CJEU by order of 27 June 2022 – 15 K 2327/20 AO. Following the CJEU’s decision, the FG Münster applied these principles to the national equitable claim under §§ 163, 227 AO in its judgment of 23 January 2024. An appeal on points of law was also lodged against this judgment.
Limitation does not extinguish the civil-law claim as such. Under § 214 Abs. 1 BGB (German Civil Code), once limitation has occurred the debtor is merely entitled to refuse performance. If the supplier raises this defence, the repayment claim can no longer be enforced in court. It is precisely this lack of enforceability that may trigger the direct claim under the CJEU case law.
No Accessory Nature in the Sense of the Administrative View
In paragraph 13 of the BMF letter of 12 April 2022, the tax authorities assume a close link between the direct claim and the civil-law repayment claim. This view is called into serious question by the more recent case law.
The FG Niedersachsen expressly rejected the notion that the tax authorities could successfully rely on the limitation of the civil-law claim in order to deny the direct claim. According to the court’s reasoning, this would be contradictory because, under the CJEU case law, the direct claim may arise precisely where the claim against the supplier can no longer be enforced because of national limitation rules.
The accessory nature as understood by the administration is therefore at the centre of the pending proceedings. A final clarification by the BFH as the highest court remains to be seen.
No Double Refund of VAT
The direct claim must not lead to a double payment of the same VAT. In its judgment of 5 September 2024 – C-83/23, H GmbH, the CJEU held that a direct claim is excluded if the tax authorities have already refunded the VAT to the supplier. The supplier’s insolvency was not decisive in this respect.
An invoice correction with a refund to the invoice issuer may preclude the direct claim, even if it is carried out by an insolvency administrator. What matters is whether the tax has already been refunded to the supplier and whether a further refund to the recipient of the supply would therefore result in a double payment.
In other cases, the tax authorities do not pass the risk of internal administrative coordination on to the recipient of the supply. Where different tax offices are responsible for the supplier and the recipient of the supply, the exchange of information within the administration must take place appropriately.
No Cases of Fraud, Abuse or Negligence
The direct claim requires that no fraud, abuse or negligence can be held against the recipient of the supply, insofar as this is decisive under the relevant CJEU case law. This limitation is particularly important in the decisions concerning limitation scenarios.
At the same time, the CJEU has emphasised that the principle of neutrality in the VAT system carries considerable weight. A sanction that in practice leads to the definitive refusal of a refund of VAT that was wrongly invoiced and paid may be disproportionate.
Interest on the Direct Claim
According to the CJEU case law, the disadvantage caused by the fact that the amount of VAT wrongly levied was unavailable must be compensated. If the VAT is not refunded within a reasonable period, interest may be considered.
Following that decision in the proceedings involving the farmer and forester, the FG Münster assumed a six-month processing period. This period is intended to enable the tax authority to examine the application and decide on the requirements of the direct claim. According to this view, the rigid interest rule in § 233a Abs. 2 Satz 1 AO, with a grace period of 15 months, cannot automatically be applied to the direct claim.
Procedure for Asserting the Claim
According to the administrative view, the Reemtsma direct claim is to be decided in equitable relief proceedings under §§ 163, 227 AO. Jurisdiction lies with the tax office responsible for assessing the recipient’s VAT.
§ 163 Abs. 1 Satz 1 AO permits a lower tax assessment if the collection of the tax would be inequitable in the circumstances of the individual case. § 227 AO concerns the waiver or refund of claims arising from the tax debtor-creditor relationship. Substantive inequity may result from the fact that, in an individual case, the interaction of VAT provisions and procedural rules leads to an outcome that is incompatible with the EU-law principles of neutrality and effectiveness.
If the requirements of the direct claim are met, the fiscal court case law assumes that the tax authority’s discretion may be reduced to zero. In that case, the equitable measure would not merely be possible, but required.
State Liability in the Event of Rejection by the Tax Authorities
If the tax authorities reject the direct claim by relying on the BMF letter of 12 April 2022, the question of compensation for losses may arise. In particular, advisory costs, liquidity disadvantages or financing losses may be considered, insofar as they are causally attributable to an unlawful rejection.
The legal basis for official liability is § 839 BGB in conjunction with Art. 34 GG (German Basic Law). The requirements include, among others:
- breach of an official duty,
- third-party protective effect of that official duty,
- fault in the form of intent or negligence,
- loss and causation,
- no contributory negligence excluding the claim,
- compliance with the subsidiarity rules of § 839 BGB.
Not every objectively incorrect application of the law also constitutes fault. According to the case law of the BGH (Federal Court of Justice), what matters is whether the legal view was still tenable after careful examination. As long as the decisive questions in insolvency and limitation scenarios have not yet been finally clarified by the BFH, an official liability claim based on rejection of the direct claim is likely, as a rule, to fail on the requirement of fault.
An EU-law state liability claim may also in principle be considered. At present, however, the requirement of a sufficiently serious breach of EU law is likely often to be problematic, as long as clarification by the highest court is still pending.
Classification of the Pending BFH Proceedings
The pending proceedings before the BFH are of considerable importance for the future treatment of the Reemtsma direct claim. They concern in particular the scope of the direct claim in insolvency cases, the significance of a possible insolvency dividend and the question whether the direct claim is accessory to the civil-law repayment claim.
Of particular significance at present are:
- BFH V R 31/24 concerning the decision of the FG Baden-Württemberg of 6 December 2023 – 14 K 1423/21,
- BFH V R 25/25 concerning the decision of the FG Baden-Württemberg of 9 April 2025 – 14 K 21/24,
- proceedings pending before the BFH concerning the decision of the FG Niedersachsen of 15 August 2024 – 5 K 40/22,
- the appeal on points of law against the judgment of the FG Münster of 23 January 2024 – 15 K 2327/20 AO.
Until a decision by the highest court is issued, the legal position remains disputed on individual points. However, the trend in the fiscal courts suggests that the administrative view in paragraphs 11, 12 and 13 of the BMF letter of 12 April 2022 is unlikely to remain fully tenable.
Frequently Asked Questions
Reemtsma Direct Claim Where the Supplier Is Insolvent: Must the Insolvency Proceedings First Be Concluded?
According to the judgments of the FG Baden-Württemberg of 6 December 2023 and 9 April 2025, the recipient of the supply does not necessarily have to wait for the conclusion of the insolvency proceedings. However, the question is pending before the BFH in proceedings V R 31/24 and V R 25/25.
FG Niedersachsen 5 K 40/22: Is There a Direct Claim Where the Repayment Claim Is Time-Barred?
The FG Niedersachsen upheld a direct claim in a situation in which the repayment claim could no longer be enforced and the supplier had been deleted from the register due to lack of assets. Proceedings on this issue are also pending before the BFH.
Practical Consequences of the BMF Letter of 12 April 2022 for Companies in Relation to the Reemtsma Direct Claim?
In paragraphs 11 to 13, the administrative view requires stricter conditions, particularly in connection with insolvency and accessory nature. Several fiscal courts consider these restrictions, in key respects, to be incompatible with the CJEU case law.
Conclusion and Tax-Law Classification
The case law on the Reemtsma direct claim is significantly shifting the standards for the refund of wrongly paid VAT in favour of the effective enforcement of refund claims shaped by EU law. In particular, the tax authorities’ requirement to wait for the conclusion of insolvency proceedings, as well as the assumption of a strict accessory nature in relation to the civil-law claim, are under considerable pressure according to the current fiscal court case law.
At the same time, final clarification by the BFH in several proceedings remains to be awaited. Until then, a careful distinction must be made between established requirements of the CJEU, fiscal court decisions and administrative positions that remain disputed.
MTR Legal Rechtsanwälte advises companies, investors and high-net-worth individuals on complex tax-law issues, including at the interface of VAT law, procedural law and civil-law repayment claims. If you have legal questions regarding the Reemtsma direct claim and VAT refund claims, you can find further information at Legal advice in tax law.
