How can I claim the input tax credit?
April 30, 2023 | 45,00 EUR | answered by Friedhelm Sauer
Dear tax consultant,
my name is Roberta Gerdes and I run a small business in the services sector. Lately, I have been focusing intensively on the topic of value added tax and have realized that I may be able to claim input tax. However, I am unsure of how exactly this works and what requirements need to be met.
Currently, I regularly pay sales tax on my income without taking advantage of the input tax. I am concerned that this may result in unnecessary costs and potential savings passing me by. Therefore, I would like to know how I can claim input tax and what steps I need to take for this.
I have already tried to inform myself online about the topic, but due to the complexity of the subject and the abundance of information, I am feeling a bit overwhelmed. Therefore, it would be very helpful if you could explain to me in simple terms how I can claim my input tax and what documents or proofs are required for this.
I look forward to your assistance and hope that you can help me to make my tax matters more efficient.
Sincerely,
Roberta Gerdes
Dear Mrs. Gerdes,
Thank you for your inquiry regarding input tax and value added tax. It is good that you have already engaged intensively with the topic and recognized the potential for claiming input tax. Indeed, considering input tax can help you save costs and make your tax matters more efficient.
In order to claim input tax, as a business owner, you generally need to meet two requirements: Firstly, the expenses for which you want to claim input tax must have been made for your business. This means that the expenses must be related to your entrepreneurial activity. Secondly, you must have the corresponding invoices and receipts that show the paid input tax.
To claim input tax, you need to declare the input tax in your advance VAT return. For this, you need to sum up the paid input tax from your purchase invoices and receipts and break it down accordingly in the advance return. The input tax will then be deducted from the VAT you collect from your customers. If the input tax is higher than the VAT you collect, you will receive a refund from the tax office.
It is important that you carefully keep all relevant receipts and invoices so that you can prove, in case of an audit by the tax office, that the input tax is legitimate. The required documents include purchase invoices, cash receipts, bank statements, and contracts, among others.
I hope this information helps you and you now have a better overview of how to claim input tax. If you have any further questions or need assistance, I am happy to help.
Best regards,
Friedhelm Sauer
