Input Tax Deduction for Advance Payments

The BFH ruled on whether input VAT can be deducted from advance payment invoices for a PV system that was ultimately never built.
The court held that the word “Vorkasse” is not strictly required on an advance invoice for the deduction to apply.
A taxpayer may deduct input VAT if, at the time of payment, they could reasonably and in good faith expect the promised service to be performed.
The first payment qualified for input VAT deduction because that expectation was considered justified.
The second payment was sent back to the lower court to determine whether the taxpayer still reasonably expected performance at that time.

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.