Uncompensated Contributions and Input Tax Deduction: Changes in Administrative Practice

• The Federal Fiscal Court (BFH) has allowed for input tax deduction even if a received service is delivered free of charge to a third party.
• The Federal Ministry of Finance (BMF) is trying to adjust administrative practice to align with this decision.
• The BMF emphasizes that the received input service should not exceed what is necessary to fulfill the purpose of the entrepreneur’s activity.
• The BMF makes changes to the Value Added Tax Application Decree (UStAE) to implement these principles.
• The BMF provides examples in the UStAE to explain when a received service is considered to fulfill a legal obligation.

Source: awb-international.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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