New VAT Rules Threaten Input Tax Deduction for Loss-Making Health and Social Institutions by 2027

• The Federal Ministry of Finance (BMF) is tightening VAT regulations for permanently loss-making institutions, especially in the health and social sector.
• Institutions with a cost recovery rate of 3% or less risk losing their input tax deduction, as they may no longer be considered as engaging in economic activity.
• Hospitals, nursing homes, and medical care centers must review their reimbursement and funding structures to mitigate tax risks.
• There is a transitional arrangement allowing compliance until December 31, 2027.
• Loss of input tax deduction could significantly impact investments and services, requiring careful documentation and possible input tax adjustments.

Source: roedl.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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