How does one proceed if they are unsure whether certain expenses are deductible as input tax?
December 17, 2023 | 40,00 EUR | answered by Marco Schottmann
Dear Tax Advisor,
My name is Sophia Baradari and I run a small business. Lately, I have been extensively dealing with the topic of input tax, as I am unsure whether certain expenses are deductible as input tax. I have some invoices where I am not sure if I can claim the VAT included on them as input tax.
I have already tried to inform myself about which expenses are generally deductible as input tax. However, I am not sure if I have taken into account all relevant information and interpreted the regulations correctly.
My concern is that I may not claim input tax amounts that I am entitled to. This could potentially result in me giving away money and unnecessarily increasing my tax burden.
Could you please explain to me how to proceed best when I am unsure if certain expenses are deductible as input tax? Are there specific criteria or guidelines I can use to correctly determine the input tax? What measures can I take to ensure that I correctly account for the input tax and do not leave any potential tax benefits unused?
Thank you in advance for your support and advice.
Best regards,
Sophia Baradari
Dear Mrs. Baradari,
Thank you for your inquiry regarding input tax. It is understandable that you are unsure about which expenses are deductible as input tax and how to ensure that you are not missing out on potential tax benefits. Indeed, the question of input tax deduction eligibility is an important and complex matter for many entrepreneurs.
First and foremost, it is important to understand what input tax is and how it differs from sales tax. Input tax is the sales tax that is charged to you by other companies when you purchase goods or services for your business. These input tax amounts can be claimed in your sales tax pre-registration and deducted from the sales tax burden.
To ensure that you correctly determine and account for input tax, there are some criteria and indicators that you can follow. Firstly, the expenses for which you want to claim input tax must be business-related. This means that the expenses must have been incurred in the course of your business activities.
Furthermore, the expenses must be properly documented. This means that you must have invoices or receipts that contain all the necessary information to claim input tax. This includes, among other things, the correct indication of the VAT ID of the supplying company, the breakdown of the individual services and goods, and the VAT amount shown.
It may also be useful to seek advice from a professional tax advisor to ensure that you correctly determine and claim input tax. A tax advisor can help you understand the relevant regulations and laws and assist you in correctly accounting for input tax.
In summary, it is important to gather and review all relevant information and documents to ensure that you correctly determine and claim input tax. If you are unsure, I recommend seeking advice from a tax advisor who can provide you with professional guidance.
I hope that this information is helpful to you. If you have any further questions, please do not hesitate to contact me.
Best regards,
Marco Schottmann
