Double Payment of Customer as Turnover

The BFH had to set the rules how to compute the double payment of a customer and his refunding July 19, 2007, re V R 11/05; published on November 7, 2007).

A GmbH had received surplus and double payments in the years 1990 and 1991, Totaling up to DM 84,884. DM 26,623 of this sum was refunded in 1993. The remaining amount was first booked neutral in profit as a loan and booked again 1994 as turnover, when it became clear that these funds were not to be paid back. The company and the tax office disagreed how to treat these transaction in accordance to VAT law.

The Federal Tax Court judged that the agreed price as well as the surplus and double payments were to be considered as assessment basis (= net price) for imposing value added tax. As is the standard ruling judgment of the Bundesfinanzhof, “remuneration” is everything which is received for any services or goods rendered (§10 I 2 UStG). If you receive payment for something that is not from your business then it is not subject to VAT.

It does not matter that these customers erred when paying. They paid with the motivation of fulfilling their debts. Refunding the customer legally means that the VAT-legal end price was reduced (§17 UStG). Insofar as the remaining overpayments finally remained with the company, there was neither a reduction of the price or has the customer’s claim been abolished. There is no legal reason to see it differently because this turnover was taxed in the year received.

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