Germany's Federal Fiscal Court ruled that animal tendons can qualify for the reduced 7% VAT rate if they are "edible offal," meaning they are objectively suitable for human consumption, overturning a lower court decision and sending the case back for reconsideration.
The court held that horse, ostrich-knee, deer, and ostrich tendons fall under tariff position 0210 of the Combined Nomenclature when edible, qualifying them for the reduced rate under Germany's VAT law. However, dried and cut ostrich stomachs must be classified under position 0504 and remain ineligible for the reduced rate because ostriches are not treated as domestic poultry under German VAT rules.
The Federal Fiscal Court rejected the lower court's reasoning that tendons are automatically inedible simply because they are listed in tariff subheading 0511 99 10. The court emphasized that classification must be based on the objective characteristics and properties of the goods, not their tariff listing alone.
For ostrich stomachs, the court confirmed they belong in position 0504 regardless of edibility, as this position covers stomachs from animals other than fish without distinguishing between edible and inedible varieties. Since only stomachs from domestic poultry qualify for reduced VAT rates, and ostriches are classified alongside other birds in position 0106 rather than as domestic fowl, ostrich stomachs remain subject to the standard rate.
The ruling clarifies that mere drying does not eliminate a product's suitability for human consumption. The court noted that many animal products require cooking before consumption, so additional factors such as spoilage, mold, or contamination would be needed to render them unsuitable for human food.
Context
This decision aligns German VAT treatment of animal byproducts with EU precedent emphasizing objective assessment of edibility. The ruling affects specialty food and pet treat manufacturers, requiring case-by-case evaluation of processing methods and end-product characteristics rather than blanket tariff-based classifications.
