VAT Treatment and Accounting of Business Gifts: Application and Examples for Tax Balance Sheets

• Gifts to business associates that are not deductible under income tax law also exclude input VAT deduction.
• Such gifts are treated as supplies for consideration for VAT purposes.
• There is no choice for the taxpayer regarding which regulation to apply; the applicable rule depends on the specific case.
• Input VAT correction may be required in certain cases.
• The accounting treatment depends on the intended use at purchase and the acquisition cost; for gifts from inventory, it must be checked if a gratuitous supply exists.

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.

---

---