Are there any special regulations for small businesses regarding input tax?
November 8, 2023 | 30,00 EUR | answered by Marco Schottmann
Dear tax advisor,
I am Emma Albrecht and I recently founded my own small business. As a small business owner, I now have to deal with the issue of input tax. I have heard that there are special regulations for small business owners regarding input tax, but I am unsure of what exactly they entail and whether they also apply to my business.
Currently, I am in a phase of expansion and have started making larger investments. This naturally incurs input tax amounts that I would like to claim in order to improve my financial situation. However, I am unsure if I am even entitled as a small business owner to deduct input tax and what requirements need to be met for this.
My concerns mainly lie in the fact that I may unintentionally violate tax regulations and inadvertently cause financial disadvantages for my business. Therefore, I would like to gather comprehensive information and find out if there are any special exceptions or regulations for small business owners that would allow me to still claim input tax.
Could you please assist me and explain if there are any special regulations for small business owners regarding input tax? Are there specific requirements that I must meet in order to deduct input tax? And how can I ensure that I am handling my taxes correctly and not making any mistakes?
Thank you in advance for your support and advice.
Best regards,
Emma Albrecht
Dear Mrs. Albrecht,
Thank you for your inquiry and your interest in the topic of input tax as a small business owner. It is understandable that you want to inform yourself comprehensively in your situation to ensure that you are acting correctly in terms of taxation and that no financial disadvantages arise for your company.
As a small business owner, there are indeed special regulations regarding input tax that apply to you. As a small business owner within the meaning of § 19 UStG, you are exempt from sales tax and therefore may not invoice any sales tax. This also means that you generally cannot claim input tax. This means that you cannot deduct the input tax amounts that are invoiced to you for your investments as operating expenses.
However, there are certain exceptions that allow small business owners to still claim input tax. One of these exceptions concerns investments in the so-called "transitional arrangements". For example, if you as a small business owner acquire assets that you intend to use for at least five years, you can claim the input tax. In this case, however, you must repay the sales tax to the tax office if the circumstances change and you exceed the sales tax liability.
Therefore, it is important that you carefully examine whether and to what extent you can claim input tax for larger investments. It is advisable to seek professional help in this regard to avoid tax errors and optimize your financial situation.
I hope that I was able to help you with this information and am happy to answer any further questions you may have. Please do not hesitate to contact me if you need further assistance.
Sincerely,
Marco Schottmann
