Input Tax Deduction for Castle Renovation: BFH Ruling on Business and Private Use Allocation

• The case concerns input tax deduction for services related to the renovation of a castle, under German VAT law.
• The plaintiff intended to use parts of the renovated castle for taxable rental activities, with some areas for private and cultural use.
• The tax office denied the input tax deduction, claiming the renovation was for private purposes, but the tax court initially sided with the plaintiff.
• The Federal Fiscal Court overturned the tax court’s decision, stating the plaintiff could deduct a proportionate amount of input tax if there was objective evidence of intended taxable use.
• The case was referred back to the tax court to clarify the amount of input tax deduction, as the original judgment lacked sufficient substantiation on this point.

Source: kpmg.com

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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