How can I, as a small business owner, claim input tax?
April 20, 2023 | 45,00 EUR | answered by Zofia Schulz
Dear tax consultant,
I am Robert Hoffmann, the owner of a small online shop that sells goods within the EU. I recently heard about the possibility for small business owners to claim input tax in order to reduce my expenses. However, I am unsure about how exactly to apply this process and what requirements I need to meet.
The current situation is as follows: I have regular expenses for materials, packaging, and other operational costs for which I would like to claim input tax. However, I have not yet submitted an input tax return and I am not sure if I am eligible as a small business owner to claim input tax.
My concerns are that I fear paying unnecessary taxes and thereby reducing my profit margin. Since my business is still in its early stages, it is especially important for me to utilize all opportunities for cost savings and to fulfill my tax obligations correctly.
Therefore, my question to you is: How can I, as a small business owner, claim input tax? What requirements do I need to meet and what steps are necessary to benefit from this tax advantage? Are there specific forms or applications that I need to fill out, and are there any deadlines that I should be aware of?
I thank you in advance for your support and advice.
Best regards,
Robert Hoffmann
Dear Mr. Hoffmann,
Thank you for your inquiry regarding the possibility of claiming input tax as a small business owner. As the owner of a small online shop selling goods within the EU, it is understandable that you are considering how to reduce your expenses and optimize your profit margin.
In general, small business owners are exempt from VAT according to § 19 UStG, and therefore are not allowed to show VAT on their invoices. However, this also means that as a small business owner, you cannot claim input tax. If you have not yet submitted an input tax return, it may be because you are benefiting from the input tax exemption as a small business owner.
To be able to claim input tax as a small business owner, you would need to waive your VAT exemption and opt for standard taxation. This means that from this point on, you would show VAT on your invoices and therefore be able to claim input tax. It is important to note that you can only claim input tax for business expenses directly related to your business activities.
To claim input tax, you must regularly submit input tax returns and accurately document your business expenses and the corresponding input tax. There are specific forms for this, such as the VAT pre-registration and the VAT return, which you must submit to the tax office. It is important to meet the deadlines for submitting these returns to avoid possible late filing penalties.
It is advisable to consult a tax advisor to clarify your individual situation and determine whether it is beneficial for your business to switch from the small business exemption to standard taxation. A tax advisor can also assist you with processing input tax returns and optimizing your tax obligations.
I hope this information was helpful to you and I am available to answer any further questions you may have.
Best regards,
Zofia Schulz
