- Input tax deduction depends on distinguishing between business and non-business (including private) use of goods or services.
- If a good is used both for business and private purposes, it can be fully allocated to business use, allowing full input tax deduction, but private use later triggers a deemed supply (unentgeltliche Wertabgabe) for VAT purposes.
- If a good is used for both business and non-economic (non-business, non-private) activities, full allocation to business is not allowed; input tax deduction is only permitted proportionally to business use.
- Supplies and services used for both business and non-business purposes must always be split according to intended use.
Source: bundesfinanzministerium.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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