- Input tax deduction is not allowed for services received before a business transitions to standard VAT taxation or the small business scheme, even if these services are used for taxable sales after the transition.
- This rule also applies if the transition is likely but has not yet occurred, and includes advance and down payment invoices.
- The actual transition to standard or small business taxation is considered a change in circumstances, allowing input tax adjustment only under specific conditions (§ 15a UStG, § 44 UStDV).
- The VAT Application Decree (UStAE) is updated accordingly, and the new rules apply to all open cases.
- For VAT returns submitted before November 10, 2025, the previous rules may still be applied, with adjustments required in later returns if necessary.
Source: blogs.pwc.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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