Restrictions on Input VAT Deduction in Transition from Flat-Rate Taxation to Standard Taxation

• The case involves the deduction of input tax for a GbR that is subject to the average rate taxation under § 24 of the Umsatzsteuergesetz (UStG).
• The Federal Fiscal Court (BFH) ruled that the input tax deduction is excluded even if the input is used for transactions in the following year when the activity is subject to regular taxation.
• If a taxpayer voluntarily or by law switches from average rate taxation to regular taxation, the input tax deduction must be adjusted according to § 15a Abs. 7 UStG, Art. 192 MwStSystRL.
• The judgment of the Lower Saxony Finance Court from May 5, 2022, was overturned.
• The plaintiff’s claim was dismissed, and the plaintiff is responsible for the costs of the entire proceedings.

Source: bundesfinanzhof.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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