Input Tax Deduction: Timing, Invoice Corrections, and Retroactive Effect in German VAT Law

The entrepreneur declared taxable sales and input tax for 2018, but the tax office rejected the input tax deduction for that year.
The tax court ruled that an input tax refund for 2019 was not possible due to lack of reciprocity with the plaintiff’s country.
The Federal Fiscal Court (BFH) found the lower court’s assumption incorrect; the right to deduct input tax could only be exercised in 2019, not 2018.
The BFH referenced CJEU case law, stating that input tax deduction should not be refused for formal invoice errors if substantive requirements are met, but retroactive invoice correction is only allowed if the original invoice contains minimum required information.
If an invoice was originally issued without domestic tax due to the assumption of a foreign service, a later correction does not have retroactive effect for input tax deduction.

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.