Germany's Federal Ministry of Finance (BMF) has clarified that public law entities (juristische Personen des öffentlichen Rechts) engaged in commercial activities can be subject to joint and several liability under Section 13c UStG, following the extension of Section 2b UStG to cover entrepreneurial activities by such entities.
The administrative guidance addresses the intersection between two key provisions of Germany's VAT Act (Umsatzsteuergesetz). Section 2b UStG governs the VAT treatment of public bodies when they engage in commercial activities, while Section 13c UStG establishes joint and several liability rules for VAT obligations in certain business relationships.
The BMF's clarification resolves uncertainty about whether public law entities conducting entrepreneurial activities could face liability exposure under the joint and several liability mechanism. This development affects municipalities, public corporations, and other governmental entities that operate commercial enterprises alongside their public functions.
