Can I claim input tax if I only have tax-exempt sales?
February 16, 2023 | 40,00 EUR | answered by Günther Hering
Dear tax consultant,
My name is Robert Schwaru and I run a small business in the cultural services sector. In my company, I generate only tax-free revenues in accordance with § 4 No. 20 UStG. I have heard that normally you can only claim input tax if you make taxable sales. However, since I only have tax-free revenues, I wonder if I even have the possibility to claim input tax.
I am concerned that I may be losing money by not being able to claim input tax. Since I already operate as a small business with tight profit margins, it is important for me to know if I can take advantage of this opportunity to reduce my costs.
Can you please explain to me if, as a business owner with exclusively tax-free revenues, I can claim input tax? Are there any exceptions or special requirements that I need to meet in order to take advantage of this opportunity? I would be very grateful for a detailed explanation and possible solutions.
Thank you in advance!
Best regards,
Robert Schwaru
Dear Mr. Schwaru,
Thank you for your question regarding input tax deduction as an entrepreneur with exclusively tax-exempt turnover according to § 4 No. 20 UStG. It is understandable that you are considering whether you can claim input tax and whether this would be beneficial for your company.
In general, entrepreneurs who generate exclusively tax-exempt turnover usually cannot claim input tax deduction. This is stated in § 15 para. 2 UStG, which specifies that input tax deduction is only possible for input supplies used for turnover that does not exclude input tax deduction. Since your turnover is exclusively tax-exempt, according to this regulation, input tax deduction would not be possible.
However, there are exceptions in certain cases that allow entrepreneurs with tax-exempt turnover to claim input tax deduction. One such exception is the so-called lump-sum tax procedure according to § 23 UStG. In this procedure, entrepreneurs who generate tax-exempt turnover and whose turnover falls below certain limits can claim a fixed percentage of input tax as a lump sum. This can be a way to reduce costs, especially for small businesses with tight margins.
It is important to note that the requirements for the application of the lump-sum tax procedure and other exceptions must be carefully examined. Therefore, it is recommended to consult a tax advisor or VAT specialist who can assist you in evaluating your individual situation and the potential use of exceptions.
I hope this information helps you and gives you an initial overview of the possibilities of input tax deduction for entrepreneurs with tax-exempt turnover. If you have any further questions or require more detailed advice, I am at your disposal.
Best regards,
Günther Hering, Tax Advisor
