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German research centres face huge back-tax bill

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German research centres face huge back-tax bill
Photo: DPA
14:32 CEST+02:00
Germany's top scientific research centres could be slapped with a multimillion-euro tax bill after it emerged that they had wrongly claimed special tax status for years.

The Financial Times Deutschland (FTD) reported on Thursday that two research centres of the Helmholtz association could face three-figure million tax bills.

The German national research centre for aeronautics and space (DLR) in Cologne could have to repay up to €300 million – from an annual budget of €574 million, the paper said.

Should this happen, it could be taken as a precedent and lead to other centres also paying huge sums in tax. This would put a big dent in Germany's investment in scientific education and research.

“Such a development would lead to a clear weakening of Germany as a base for research,” said a statement from the Economy Ministry, which is responsible for the DLR.

The Jülich Institute, which specialises in research into the environment, medicine and energy, could also face a potentially ruinous tax claim, the FTD said.

The centres have reportedly been claiming value-added tax back from the tax office as if they were companies – thus saving themselves millions when buying in services and goods.

But because the centres conduct basic scientific research and rarely develop products that reach the market, the VAT claw-back is not justified – it cannot be reclaimed for basic research.

On average, all 17 Helmholtz centres could face a bill of up to €40 million a year each – plus back-dated claims, according to the Berlin state Research Ministry.

The federal Research Ministry called for a swift resolution to the situation, although the FTD said that the Economy Ministry has already confirmed the basic argument of the accountants – the research institutes are “responsible for their own tax returns” and “should not count on being helped with additional budgetary money.”

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