Input VAT is the VAT shown on incoming invoices that a business owner can claim back from the tax office or offset against their own VAT liability, provided legal conditions are met.
Basics
When a company receives an invoice showing VAT, this tax amount generally constitutes input tax. One of the prerequisites is that the supply or service was acquired for the company's business.
input tax is allocated within the VAT Return taken into account and offset against the VAT due.
Legal framework
The right to deduct input tax is regulated by law and requires an proper invoice as well as the use of the acquired service for business purposes.
Systematic classification
Input tax relates to:
In accounting, it is recorded in appropriate input tax accounts. The basis is correctly formed Booking entries and proper Account assignment.
Key requirements
- Proper invoice
- Entrepreneurial use of the service
- Recording in financial accounting
Typical procedure
- Receipt of a proper invoice
- Recording input tax in accounting
- Offsetting within the scope of the VAT advance return
Practical relevance
Accurate input of input tax is essential for a correct VAT return. Incorrect or incomplete information can lead to discrepancies in tax calculations.
Typical sources of error
- Missing or incorrect invoice details
- Incorrect accounting entry
- Deducting input tax without a business connection
FAQ
Who is entitled to deduct input tax?
Entrepreneurs who are entitled to deduct input tax and meet the legal requirements.
Will input tax be refunded automatically?
It is offset against the VAT payable within the scope of the VAT pre-registration.
Ist Vorsteuer dasselbe wie Umsatzsteuer?
No, input tax is the VAT paid on purchases, whereas output tax is charged on sales.
Conclusion
Input tax is a central component of the VAT system. Its correct recording in the financial accounts forms the basis for proper VAT pre-registration.
Brasser Accounting Solutions GmbH is a specialised accounting service provider and part of a corporate group with Quint GmbH (tax consultancy/auditing) and Service Place Årjäng AB (Swedish tax office). BAS exclusively performs services according to § 6 No. 3 and 4 StBerG and does not provide tax or legal advice.
