- The Bundesministerium der Finanzen is addressing the issue of free donations and input tax deduction.
- A business is entitled to deduct input tax if they receive input services for the purpose of their business activities.
- A business can deduct input tax if they intend to use the services for their business activities to provide paid services.
- Previously, there had to be a direct and immediate connection between the input and output services for the deduction to be allowed.
- However, the BFH has ruled that a deduction is allowed for indirectly business-related input services that are provided free of charge to a third party, as long as there is no risk of untaxed final consumption.
- The decision applies to all states in Germany.
Source: bundesfinanzministerium.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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