VAT Deduction Denied: Federal Fiscal Court Rules on Heating System Installation Costs for Residential Letting

• Landlords provide additional supplies like heating and hot water to tenants
• ECJ ruled that energy supply by landlord should be assessed independently
• Plaintiff installed new heating system and hot water tank in rented flats
• Plaintiff opted to be liable to VAT on supplies of heating and hot water
• Tax office considered supply of heating and hot water as ancillary to letting
• Fiscal Court Münster allowed input VAT deduction, but Federal Fiscal Court disagreed
• German Federal Fiscal Court ruled that costs of heating system installation are linked to VAT exempt letting service
• Input VAT from installation costs of heating system is not deductible for landlords.

Source: kmlz.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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