The case
The Federal Supreme Court has confirmed its case law, according to which an independent non-entrepreneurial area can only be assumed if the separation can be executed in a sufficiently clear way, be it because of a clearly recognisable separate activity or a clear purpose that differs from the one of the entrepreneurial activity. According to the Federal Supreme Court, the ideational purpose of the musical performances (free church activity) can be clearly distinguished from the entrepreneurial activity of the taxable association (sale of food, etc.), entailing that it is irrelevant whether the two activities are considered clearly different judging from outside. It is also of no importance whether the marginal entrepreneurial activity could not be partially performed without the musicals. The complainant does not perform the musicals in order to promote his entrepreneurial activity, but takes the opportunity to carry out a subordinate entrepreneurial activity on the occasion of the (ideationally motivated) performances. The specific calculation of the input tax correction was not the subject of the proceedings. Dismissal of the taxable person’s appeal.
The commentary
The principle mentioned above is in favour of the taxpayer “…according to which … can only be assumed if…”. In practice, a separation between company divisions should almost always be “sufficiently clear”, because almost all companies are divided into their own divisions (silos), whether strategically (purpose) or operationally (recognisable management structure).
