FG Münster allows deduction of input tax for commercial area development

• The FG Münster has ruled that a municipal GmbH can deduct input tax from the development of a commercial area.
• A GmbH, in which a city is 85% involved and a bank is 15% involved, brought a lawsuit before the FG Münster.
• The purpose of the GmbH is to develop new commercial areas in the city and make them ready for construction.
• The city transferred the development of the building area to the GmbH.
• The GmbH sold the properties to various entrepreneurs and opted for VAT liability.
• The dispute was about the deduction of input tax for the development facilities.
• The tax office rejected the deduction for the development facilities, as they were transferred to the city free of charge.
• The tax office argued that there was no economic connection with the property sales and that it would create unfair competition.
• The GmbH argued that the development of the facilities was necessary for the property sales.
• The lawsuit was successful.

Source: haufe.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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