BFH Clarifies VAT Deduction Rules for Insolvency Administrators in Business Continuation and Cessation Cases

• The BFH has made several rulings on VAT issues in insolvency cases.
• Differentiation is required between business continuation and cessation by the insolvency administrator for VAT deduction assessment.
• In a ruling from 23 October 2024, the BFH clarified that VAT from insolvency administrator services must be split if used for both business and private insolvency liabilities.
• If the business is continued without significant liquidation actions, VAT allocation is based on the debtor’s overall activities during insolvency administration.
• Business continuation by the insolvency administrator focuses on preserving the debtor’s business rather than satisfying creditors.
• In a separate decision, the BFH ruled on VAT allocation when business activities have ceased, based on the debtor’s previous business activities.
• The direct link for VAT deduction is between the administrator’s service and creditor claims related to past business activities.
• The XI Senate aligns with previous rulings of the V Senate regarding trustee services and applies them to insolvency law.
• Another decision states that a VAT surplus from the preliminary insolvency period should be offset with pre-insolvency VAT, not included in the insolvency estate’s tax calculation.

Source: ebnerstolz.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.

---

---