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Understanding the Conditions for Input Tax Deduction and Donations in Germany

  • The text discusses the conditions for claiming input tax deduction.
  • The tax authorities have reviewed the case law on input tax deduction for “indirect” causation and amended the VAT guidelines.
  • Previously, indirectly pursued purposes were irrelevant for input tax deduction.
  • However, a recent judgment by the Federal Fiscal Court (BFH) has allowed input tax deduction for indirectly business-related purchases that are subsequently supplied free of charge to a third party.
  • The tax authorities have provided detailed guidelines on when this judgment applies, with strict conditions.
  • The VAT guidelines have been adjusted accordingly.


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.


VAT news
VAT news