How does input tax affect the VAT return?
September 17, 2022 | 40,00 EUR | answered by Marco Schottmann
Dear tax advisor,
My name is Lilli Sontheimer and I run a small online trading company. I have always had difficulties with the topic of input tax in my VAT return. I understand in principle that I can deduct the input tax, i.e. the VAT that is invoiced to me when purchasing goods or services, from the VAT that I pay to the tax office. However, I am unsure about the specific impact this has on my VAT return.
Currently, I am in a situation where I have incurred many expenses for my business for which I have paid input tax. However, I am not sure how to correctly account for these in my VAT return in order to avoid making mistakes and potentially having to make tax payments.
My concerns mainly lie in not knowing exactly how to correctly apply input tax to my turnover and whether there are specific deadlines or requirements that I need to consider. I want to ensure that I am taking advantage of all opportunities to minimize my tax burden while also acting in compliance with the law.
Could you please explain in detail how input tax affects my VAT return and what specific steps I need to take to correctly account for input tax? Are there any specific documents or evidence that I need for this? I thank you in advance for your help and advice.
Yours sincerely,
Lilli Sontheimer
Dear Mrs. Sontheimer,
Thank you for your inquiry regarding the topic of input tax in your VAT return. As a tax consultant specializing in this subject, I am happy to explain in detail how input tax affects your VAT return and what specific steps you need to take to correctly account for input tax.
Input tax is basically the VAT that is invoiced to you on your purchases of goods or services. You can deduct this input tax from the VAT that you have to remit to the tax office. This reduces your tax burden, as you only have to pay the difference between the remitted VAT and the paid input tax to the tax office. This mechanism is designed to ensure that companies are not double taxed.
To correctly account for input tax in your VAT return, you need to collect and keep all invoices and receipts for your business expenses. These serve as proof of the paid input tax. In the VAT return, you then enter the amount of input tax from the invoices into the corresponding fields and deduct it from the VAT to be remitted.
It is important to claim input tax within the legally prescribed deadlines. Typically, you must claim input tax in the VAT pre-registration period in which you received the invoices. It may therefore be necessary to account for input tax for expenses from different months in one VAT return.
In addition to the invoices, you should also ensure that the invoices contain all legally required information, such as the name and address of the providing company, the issue date, the tax number or VAT identification number, the quantity and type of services provided, and the specified VAT rate.
I hope that this information is helpful to you and that you will feel more confident in dealing with input tax in your VAT return in the future. If you have any further questions or need assistance, please feel free to contact me.
Best regards,
Marco Schottmann
