Input Tax Correction in Tax Group: Challenges and Implications of Supplier Refunds in Parent-Subsidiary Relationships

Input VAT Adjustment in Group Relationship: Annotated BFH 06.12.2023 XI R 5/20

• Input tax correction in the case of a tax group
• Payments made by the parent company to suppliers of the subsidiary, due to financial difficulties of the subsidiary, were challenged by the parent company’s insolvency administrator
• If the supplier refunds the parent company, it leads to an input tax correction for the subsidiary to which the services were provided
• Example: T-GmbH as the parent company and S-GmbH as the subsidiary had a VAT group. T-GmbH paid for many deliveries to S-GmbH due to financial difficulties. The VAT shown on the invoices to S-GmbH was claimed as input tax by T-GmbH as the parent company.

Source: datenbank.nwb.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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