Austria: Federal Finance Court Clarifies Input VAT Deductions on Legal Settlements

• The Austrian Federal Finance Court ruled on input VAT deductions for legal settlement amounts.
• A taxpayer claimed an input VAT deduction on a settlement amount, IT maintenance, tax advice, operating costs, and rent.
• The Tax Agency denied the deduction on the settlement due to a lack of proper invoices.
• The Taxpayer argued that the settlement amount should be considered a gross amount, entitling them to an input tax deduction.
• The Federal Finance Court dismissed the appeal.
• The Court found that an input tax deduction is possible for the losing party, but only for their own lawyer’s services.
• If the successful party is entitled to deduct input VAT, the losing party can reclaim the VAT awarded as compensation.
• The Court determined that it was not possible to determine the settlement amount for which the Taxpayer was or wasn’t entitled to deduct input VAT from the invoices.

Source: news.bloombergtax.com

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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