Input tax deduction

Definition of input tax deduction

The input tax deduction is the core of sales taxation (§ 15 UStG). It is used to take into account the sales tax levied on the preliminary stages. This avoids accumulation in taxation and achieves competitive neutrality. The input tax deduction for export transactions exempt from tax according to § 4 No. 1 to 6 UStG provides complete relief for exports.

Deduction of input tax

The input tax deduction is taken into account for the pre-registration and assessment period. Only an entrepreneur is entitled to deduct input tax. However, regardless of whether it is based in the survey area or whether it generates sales in the survey area.

Entrepreneurs whose total sales did not exceed € 17,500 in the previous calendar year and who are not expected to exceed € 50,000 in the current calendar year and who, as small entrepreneurs, make use of the taxation pursuant to Section 19 (1) UStG, are excluded from the input tax deduction.

The following can be deducted as input tax:

  • That charged separately by other entrepreneurs value added tax for deliveries and other services (§ 15 Paragraph 1 No. 1 UStG).
  • The import sales tax paid for items that have been imported (Section 15 (1) No. 2 UStG). The time of receipt of the invoice is decisive.
  • The tax for the intra-community acquisition of goods.
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