How does the input tax refund work for entrepreneurs?
August 4, 2022 | 40,00 EUR | answered by Lorenzo Zimmermann
Dear Sir or Madam,
I am Heike Zollmann and I run a small business in the online sale of handmade jewelry. I have heard that there is a possibility for entrepreneurs to reclaim the input tax, that is, the paid value-added tax on purchases. However, I am unsure of how exactly this process works and if I could benefit from it.
Currently, I regularly purchase materials for my products and of course pay value-added tax on them. I have heard that I can claim this input tax to reduce my financial burden. However, I do not know how to implement this in practice and if it is even worth it, as my turnover is still relatively low.
My concern is that I may be losing money that is rightfully mine just because I am not properly informed. Therefore, I would like to know from you how I, as an entrepreneur, can apply for the input tax refund and what conditions need to be met. Are there specific deadlines that I must adhere to? And how can I ensure that I do not make any mistakes that could cause problems later on?
I would greatly appreciate it if you could explain to me in simple terms how I, as an entrepreneur, can benefit from the input tax refund and what steps I need to take for it. Thank you in advance for your help.
Sincerely,
Heike Zollmann
Dear Mrs. Zollmann,
Thank you for your inquiry regarding the input tax refund as a business owner. As an expert in tax matters concerning input tax, I am pleased to be able to assist you.
As a business owner, you have the opportunity to claim back the input tax, also known as value-added tax, that you pay when purchasing materials, from your tax office. This can help reduce the financial burden of the value-added tax and therefore lower your costs. This can be particularly important for small businesses like yours.
In order to claim back the input tax, you must first be entitled to input tax deduction as a business owner. This means that your purchases must be made in the course of your business activities. Additionally, the purchases must be properly documented, meaning you must have a correct invoice with the value-added tax clearly stated.
To claim back the input tax, you must submit a VAT return to the tax office. In this return, you declare both your sales and the input tax amounts. Based on this information, it will be calculated whether you will receive a refund of the input tax or if you still need to make payments.
There are no strict deadlines for claiming the input tax refund, however, it is important to submit the VAT return regularly and on time to avoid late payment penalties. It is crucial that you keep all necessary documents carefully and double-check the information in the return to avoid errors.
Overall, the input tax refund can be a beneficial way for your business to reduce costs and increase liquidity. I recommend contacting a tax advisor if necessary to ensure that you are correctly following all requirements and regulations.
I hope this information is helpful to you and I am available for any further questions you may have.
Best regards,
Lorenzo Zimmermann
