How to calculate the input tax for mixed transactions?
August 19, 2023 | 30,00 EUR | answered by Marco Schottmann
Dear tax advisor,
my name is Jonas Zellmer and I run a small craft business that offers both craft services and the sale of materials. I am a bit unsure about how to correctly calculate input tax in mixed businesses.
The current situation is as follows: I regularly purchase materials for my craft work, on which I pay value-added tax. At the same time, I sell these materials to my customers, to whom I also charge value-added tax. Value-added tax also applies to my craft services.
My concerns are that I do not know exactly how to correctly calculate input tax in these mixed businesses. I want to make sure that I do not make any mistakes or evade taxes, but also do not claim input tax unjustifiably.
Therefore, my question to you is: How can I correctly calculate input tax in mixed businesses? Are there any special regulations or peculiarities that I need to consider? What information and documents do I need to correctly declare input tax?
Thank you in advance for your help and support. I am very grateful for your expertise and look forward to your response.
Best regards,
Jonas Zellmer
Dear Mr. Zellmer,
Thank you for your inquiry regarding the calculation of input tax in mixed business operations in your craft business. I understand your concerns and would like to help you further to ensure that you comply with all tax regulations correctly and avoid any errors.
In mixed business operations, as you describe, where both materials are sold and services are provided, the calculation of input tax is more complex than in pure service companies. It is important to note that you can only claim input tax for expenses directly related to taxable turnover.
To correctly calculate input tax, you must first differentiate between input supplies used exclusively for taxable turnover and those used for non-taxable turnover. In mixed business operations, it is important to make a split to only claim the input tax that actually applies to taxable turnover.
To calculate input tax, you need accurate records of your purchases, including materials for sale and for your craft services. You should collect invoices and receipts showing the value added tax in order to claim it correctly. Accurate bookkeeping is essential to calculate input tax correctly and avoid tax errors.
There are no specific regulations or special considerations to be aware of in mixed business operations, except for the correct split between taxable and non-taxable turnover. It is advisable to seek support from a tax advisor to ensure compliance with all tax regulations.
I hope this information is helpful to you and I am available if you have any further questions. Thank you for your trust in my expertise and I wish you continued success with your craft business.
Best regards,
Marco Schottmann
