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Is my company entitled to input tax deduction if commissions predominantly come from non-EU countries?

May 31, 2016 | 25,00 EUR | answered by Grit Weidauer

Question regarding value added tax law:

My company receives commissions mainly from outside the EU. The commissions are for the referral of customers generated through the internet. The customers are generated by directing interested parties to certain German websites. Is my company entitled to deduct input tax?

Grit Weidauer

Dear inquirer,

Assuming that you provide intermediary services to another entrepreneur, your services are subject to VAT at the recipient of the service in accordance with § 3a (2) of the German VAT Act. The recipient must follow the reverse charge procedure in his country in accordance with § 13b (2) No. 1 of the German VAT Act.

The input tax deduction exclusion according to § 15 (2) of the German VAT Act applies to tax-exempt sales. However, since you carry out sales that are not taxable in Germany, the input tax deduction exclusion does not apply.

Based on the information provided, your company is entitled to input tax deduction.

Please do not forget to report your non-taxable sales in the VAT return.

Best regards,

Grit Weidauer
Tax consulting Munich