What requirements must I meet in order to be able to deduct input tax?
April 9, 2022 | 30,00 EUR | answered by Phillip Buchner
Dear tax advisor,
My name is Ammelie Ehrig and I am a self-employed graphic designer. In my work, I regularly incur costs for materials and office supplies that I purchase from various suppliers. I have heard that under certain conditions, I can deduct input tax, i.e. the sales tax that is invoiced to me on my purchases, from my own sales tax.
My question now is, what specific requirements must I meet in order to deduct the input tax? I want to make sure that I accurately document all necessary documents and information to avoid any potential difficulties with the tax office. Are there specific criteria that I need to consider in my purchases and invoices in order to claim the input tax deduction?
Furthermore, I would like to know what happens if I do not meet the requirements for the input tax deduction. What consequences could this have for me and my tax situation? Are there ways to fulfill these requirements afterwards or to correct the input tax deduction if I have made a mistake?
I would greatly appreciate your detailed advice on this topic, as it is an important issue for me as a self-employed individual to fulfill my tax obligations correctly. Thank you in advance for your support.
Sincerely,
Ammelie Ehrig
Dear Ms. Ehrig,
Thank you for your inquiry regarding input tax deduction as a self-employed graphic designer. I am pleased that you are looking into this topic in order to fulfill your tax obligations correctly.
In order to deduct input tax, as a business owner, you must generally meet two requirements. Firstly, the purchases for which you want to claim input tax must be for your business activities. This means that the materials and office supplies you purchase must be used for creating your graphic design work.
Secondly, you must have proper invoices that contain all the necessary information. This includes your name and address, invoice number, date of issue, quantity and type of goods delivered or services provided, net amount, VAT rate, and tax amount. If the invoices do not contain this information, the input tax deduction cannot be claimed.
It is important that you ensure your invoices are correctly issued and contain all necessary information when making purchases. Otherwise, you risk the tax office rejecting the input tax deduction and having to pay back the VAT.
If you unintentionally do not meet the requirements for input tax deduction, you generally have the option to correct this afterwards. You can later add or correct missing invoice details. However, it is advisable to pay attention to correct invoices from the beginning to avoid potential difficulties.
If the tax office rejects the input tax deduction, this can lead to a repayment of VAT. Additionally, there may be sanctions in the form of interest or penalties. Therefore, it is important to carefully review and comply with the requirements for input tax deduction.
I hope that my explanation has been helpful and has given you a better understanding of how input tax deduction works and what requirements you need to consider. If you have any further questions, I am happy to help.
Sincerely,
Phillip Buchner
