The Supreme Court of Germany for tax and customs/excise duty matters has released the court decision that explains input tax deduction rules for a retail sales agreement.
The taxpayer works to promote medium-sized retail companies in various industries where he is a registered cooperative. The input tax deduction was claimed on the issued sales invoice by one of the cooperative members of his new branch where the taxpayer was also providing funds. However, the tax office rejected the deduction, claiming that the payment was a non-taxable grant.
The court allowed the deduction during the appeal, because:
CLAIMING INPUT TAX
If you have received an invoice (or a service) with VAT, you may deduct input tax. However, there are also factors that makes deduction impossible. These includes:
THING TO CONSIDER BEFORE REQUESTING INPUT TAX DEDUCTION:
You should be able to take the appropriate measures to ensure your right for input VAT deduction in the applicable VAT period based on the answers to these questions.
Source: Federal Finance Court Germany, VR 22/18
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