Can I deduct the value added tax on vehicles used for business purposes?
March 12, 2024 | 40,00 EUR | answered by Emma Wagner
Dear tax advisor,
My name is Franceska Sauer and I run a small business in the field of handicrafts. In my business, we use several vehicles for business purposes, whether it be for transportation or customer visits. Now I am wondering if I can deduct the VAT for these business-used vehicles and how exactly that works.
The current situation is that VAT has been incurred for the acquisition and use of the vehicles, but I am unsure if I can claim these costs for tax purposes. As a small business owner, it is particularly important for me to explore all possibilities for tax savings in order to keep my operating costs low.
My concerns are that I do not know exactly what the regulations are regarding VAT on business-used vehicles and if I may have overlooked any tax benefits here. I want to ensure that I fill out my tax return correctly and do not leave any potential tax benefits unused.
Could you please explain to me if and how I can deduct the VAT on business-used vehicles? Are there specific requirements that I must meet in order to claim these costs for tax purposes? What documents do I need to submit and what forms do I need to fill out? I appreciate your support and advice on this matter.
Thank you in advance.
Sincerely,
Franceska Sauer
Dear Mrs. Sauer,
Thank you for your question regarding the value added tax on commercially used vehicles in your craft business. As a small business owner, it is indeed important to take advantage of all opportunities to save on taxes in order to keep your operating costs low. I will be happy to explain to you how you can deduct the value added tax on these vehicles.
In principle, you can deduct the input tax, which is the value added tax you have paid for the acquisition and use of commercially used vehicles, from the value added tax you receive from your customers. This is called input tax deduction. In order to be able to deduct the input tax, the vehicles must be used exclusively for business purposes. If you also use the vehicles privately, you would have to calculate and deduct the private portion.
In order to deduct the input tax, you must of course have the corresponding receipts. This means that you must carefully keep invoices and contracts for the acquisition of the vehicles as well as for operating costs such as repairs, fuel, insurance, etc. These receipts serve as proof for the tax office that the vehicles were actually used for business purposes.
In your VAT return or declaration, you must then specify the input tax you have paid for the commercially used vehicles. The tax office will verify this information as part of the VAT return and deduct the input tax from the value added tax you have received from your customers. This will reduce your VAT liability.
It is important that you comply with the requirements and legal regulations when deducting the value added tax on commercially used vehicles to avoid possible tax demands or sanctions. If you are unsure, I recommend that you seek advice from a tax advisor to ensure that you fill out and calculate everything correctly.
I hope this information helps you and answers your questions. If you need further assistance, I am here to help.
Best regards,
Emma Wagner
