What requirements does my company have to meet in order to be able to deduct input tax?
October 10, 2022 | 40,00 EUR | answered by Phillip Buchner
Dear Tax Advisor,
I am Tatiana Busch, the owner of a small business, and I am faced with the question of what requirements my company must meet in order to deduct input tax. In the past, I have made some expenses where input tax has been incurred. Now I am unsure if I can actually deduct this input tax and how I should best go about it.
My company is active in the online trading sector and I operate both domestically and internationally. I have read that there are certain criteria that my company must meet in order to deduct input tax, but I am not sure if I meet all of these requirements. I want to ensure that I do not make any mistakes and do not incorrectly deduct input tax, as I do not want my company to run into any difficulties because of it.
Could you please explain to me what specific requirements my company must meet in order to deduct input tax? Are there any specific documents that I need to provide in order to claim the input tax deduction? And are there any exceptions or special regulations that may apply to my company?
I thank you in advance for your help and look forward to your answers.
Sincerely,
Tatiana Busch
Dear Mrs. Busch,
Thank you for your inquiry regarding input tax deduction in your company. As a tax advisor, I am happy to assist you with this matter.
First and foremost, it is important to understand that input tax deduction for businesses is a way to reclaim the VAT paid on business-related expenses from the tax authorities. To be able to deduct input tax, certain conditions must be met. Below, I will explain the key criteria that your company must meet in order to claim input tax deduction.
1. Entrepreneurial activity: Your company must engage in entrepreneurial activities in order to deduct input tax. This means that as a business owner, you engage in transactions that generate income.
2. Taxable transactions: The expenses for which you want to deduct input tax must be related to taxable transactions. This means that the expenses for your company must be used to generate income.
3. Tax-relevant expenses: The expenses for which input tax is to be deducted must be subject to VAT. This means that the expenses cannot be exempt from VAT.
4. Input tax deduction eligibility: You must have a valid VAT identification number in order to deduct input tax.
In order to claim input tax deduction, you usually need to provide the corresponding invoices and receipts showing that VAT has actually been incurred. It is important that the invoices contain all the necessary information and are kept in good order.
There are also certain exceptions and special regulations that may apply to your company. For example, there are specific regulations for cross-border trade within the EU. In such cases, additional documentation may be required to claim input tax deduction.
I hope this information is helpful to you. If you have any further questions or need assistance, please feel free to contact me.
Best regards,
Phillip Buchner
