Can I claim input tax for private expenses as well?
December 27, 2023 | 50,00 EUR | answered by Oliver Götzinger
Dear tax advisor,
My name is Irmgard Völker and I run a small online trading company. In my business routine, I regularly have to make VAT payments, which I would like to handle as efficiently as possible. I have heard that it is possible to claim input tax for private expenses. Is this true and how exactly does it work?
I am wondering if it is possible to claim a proportion of the input tax for purchases that are used both for business and personal purposes. For example, if I buy a new smartphone that I use both for business communication with customers and personally, can I reclaim a portion of the input tax and if so, how do I calculate this proportion?
Furthermore, I am curious about the requirements that need to be met in order to claim input tax for private expenses. Are there specific criteria that I need to consider? And what about the traceability of the allocation between business and personal use?
I would greatly appreciate it if you could answer these questions for me and provide any additional tips on how I can optimize my input tax payments. Thank you in advance for your help!
Best regards,
Irmgard Völker
Dear Ms. Völker,
Thank you for your inquiry regarding input tax on mixed-use expenses in your online trading company. I am pleased that you are interested in efficiently managing your VAT payments, and I will do my best to answer your questions in detail.
First of all, it is indeed possible to claim input tax for private expenses, as long as these expenses are used for both business and personal purposes. This is referred to as mixed-use expenses. In your example with the smartphone that is used both for work and personal use, you can reclaim a portion of the input tax. The exact calculation of this portion is based on the percentage ratio between business and personal use. You will need to estimate the percentage of the smartphone that is used for business and claim that portion as input tax.
In order to claim input tax for private expenses, certain conditions must be met. Firstly, the private use of the expense must be able to be proven. This can be done, for example, by a plausible allocation of usage duration or quantity. Additionally, the mixed-use expense must be directly attributable to the company and be in an economic connection to your entrepreneurial activity.
The traceability of the allocation between business and private use is crucial for the recognition of input tax. Therefore, it is advisable to carefully keep all relevant receipts and documents and maintain a clear documentation of the use of expenses. This not only facilitates the calculation of the input tax portion but is also important in the event of a tax audit.
To optimize your input tax payments, I recommend keeping a precise record of your business and private expenses. This way, you can maximize the input tax deduction and potentially benefit from tax advantages. It may also be beneficial to seek professional support from a tax advisor to ensure that you are taking full advantage of all opportunities for input tax optimization.
I hope I have been able to answer your questions comprehensively and I am available for further information. Thank you for your interest, and I wish you continued success with your online trading company.
Best regards,
Oliver Götzinger
