What happens if I deduct input tax incorrectly?
December 24, 2023 | 30,00 EUR | answered by Lorenzo Zimmermann
Dear tax advisor,
My name is Chloé Gehrmann and I run a small online business. In the past, I have deducted input tax amounts that may not have been correct. Now I am concerned that this could lead to problems with the tax office.
The current situation is as follows: In recent years, I have regularly claimed input tax amounts in my VAT return without carefully checking whether the invoices and receipts actually meet all the requirements for input tax deduction. I have recently discovered that some of these receipts may not meet the tax office's requirements.
My concerns are that the tax office could find out during an audit that I have incorrectly deducted input tax amounts. This could lead to additional payments, penalties, or other consequences that I, as a small business owner, would find difficult to cope with.
Therefore, my question to you is: What happens if I have incorrectly deducted input tax amounts? What consequences could I face and how can I possibly avoid or correct them? I am worried about potential financial consequences and would like to know the best course of action in this situation.
Thank you in advance for your support and advice.
Kind regards,
Chloé Gehrmann
Dear Mrs. Gehrmann,
Thank you for your inquiry regarding the possible consequences if input tax amounts were deducted incorrectly. It is understandable that you are concerned, as an audit by the tax office can lead to unpleasant consequences. I will explain in detail below what possible consequences you may face and how best to proceed.
If input tax amounts were mistakenly deducted, this can indeed result in additional payments and penalty payments. In such a case, the tax office may demand a correction of the VAT returns and require the incorrectly claimed input tax amounts to be refunded. Additionally, interest may accrue for late payment of the additional amounts due.
The amount of penalty payments depends on the severity of the violation. In the case of accidental errors or negligence, usually lower penalties are imposed than in the case of intentional actions. Therefore, it is important that you proactively approach the tax office as soon as you notice an error in the input tax deductions. Voluntary self-correction can help avoid penalty payments or at least reduce them.
To clarify the situation as best as possible, I recommend the following steps:
1. Review all input tax amounts deducted so far for accuracy and completeness. Make sure that all receipts meet the tax office's requirements.
2. Document all errors and discrepancies you identify. Create a list of the affected input tax amounts and receipts.
3. Report the errors to the tax office in the form of a corrected VAT return. Explain which input tax amounts were deducted incorrectly and what corrections need to be made.
4. Offer your cooperation to the tax office and demonstrate that the errors were unintentional. The more transparent you are, the more likely the tax office will be willing to waive penalty payments or reduce them.
It is important that you take proactive steps to correct the errors before the tax office discovers them during an audit. By communicating openly with the authorities and showing your willingness to correct the mistakes, you can minimize potential financial consequences.
I hope this information helps you and provides you with clear guidance on how to handle incorrectly deducted input tax amounts. If you have any further questions or need assistance, I am at your disposal.
Best regards,
Lorenzo Zimmermann
Tax Advisor
