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