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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.

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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