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Germany: Government clarifies the decision on VAT Deduction for input services

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The German Ministry of Finance issued Tax Court Decision No. XI R 13/19, clarifying VAT deduction rules for input services purchases. By managing a real estate fund, a German investment firm supplied input services to clients. The taxpayer requested input tax deductions, which the tax office rejected. 

 

The tax court denied the taxpayer’s petition on appeal, saying that: 

 

  • VAT paid for input services is not deductible if the expenditure is incurred in connection with VAT-exempt management services  
  • The taxpayer did not meet the legal requirements for claiming the input VAT deduction. 

 

 

Source: bundesfinanzhof.de   

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