- 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.
Latest Posts in "Germany"
- Abolishing the 150-Euro Duty-Free Limit: Strengthening EU Market Protection and Competitiveness
- VAT Exemption for Welfare Associations: Second-Hand Shops, Bike Repairs, and Social Services Expanded
- CJEU: VAT Exemption for Intra-Community Supplies Not Denied Solely for Missing Specific Evidence
- BFH: Free E-Subscription to Newspaper (2009-2012) Not Subject to Separate VAT Remuneration
- Input Tax Deduction: Timing, Invoice Corrections, and Retroactive Effect in German VAT Law
