Driving school instruction provided for obtaining driver's licence classes B and C1 is subject to VAT. This ruling of the ECJ (ECJ, judgment of 14 March 2019, Case C-449/17; EU:C:2019:202) has now also been confirmed by the BFH, which published its decision on 16 August 2019 (BFH judgment of 23 May 2019, V R 7/19 (V R 38/16)). The background was a claim brought by a driving school. The school did not show statutory VAT on its invoices, since in its view the services were VAT-exempt. In principle, § 4 No. 21 UStG provides that, under certain conditions, teaching services that directly serve educational and training purposes are to be treated as tax-exempt. According to the BFH ruling, however, no such service exists here, as the required certification was not in place. Accordingly, statutory VAT must be applied. This view had already been taken by the ECJ, which ruled that driving school instruction does not constitute tuition within the meaning of Article 132(1)(i) and (j) of the VAT Directive and is therefore not to be equated with school or university education. BFH, judgment of 23 May 2019, V R 7/19 (V R 38/16); published on 16 August 2019
Frequently asked questions
Frequently asked questions
Are driving lessons for licence classes B and C1 subject to VAT?
Yes, driving lessons for obtaining licence classes B and C1 are subject to VAT. The BFH confirmed this in its ruling of 23 May 2019 (V R 7/19), referring to the ECJ ruling of 14 March 2019 (C-449/17). Driving schools must therefore charge and remit the statutory VAT on their invoices.
Why is driving school instruction not classified as tax-exempt school and educational instruction?
The ECJ has ruled that driving school instruction does not constitute education within the meaning of Art. 132(1)(i) and (j) of the VAT Directive and therefore cannot be equated with traditional school and university instruction. Teaching driving skills is a specialised form of instruction that, on its own, does not meet the breadth and depth of general education required for a VAT exemption.
Under what conditions can teaching services be VAT-exempt under § 4 Nr. 21 UStG?
Under § 4 Nr. 21 UStG, teaching services provided by private schools and other general or vocational training institutions are VAT-exempt if they directly serve educational purposes. A key requirement is a certificate from the competent state authority confirming that the institution properly prepares students for a profession or for an examination to be taken before a public-law body. Without this certificate, the exemption does not apply.
What consequences arise from the BFH ruling for driving schools?
Driving schools must invoice their services for obtaining driving licence classes B and C1 with 19% VAT and disclose the tax on their invoices. They cannot rely on a VAT exemption under national law or the EU VAT Directive (MwStSystRL). In return, driving schools are entitled to deduct input VAT on incoming supplies.