Fictitious input tax deduction: A key to tax optimization

The fictitious input tax deduction offers companies a valuable opportunity to reduce their tax burden and at the same time strengthen their competitiveness. In this article, you will find out what the fictitious input tax deduction is, to which objects it can be applied and what documentation is required.

What is the fictitious input tax deduction?

The fictitious input tax deduction relates to the input tax that a company can claim on expenses that arise in connection with the purchase of goods for taxable business purposes, but for which there is no invoice showing value added tax (VAT). This is particularly relevant when a customizable movable object is purchased and no VAT is openly passed on. The legal basis for this is found in Article 28 (1) of the VAT Act.

areas of application

The deduction of fictitious input taxes is possible under certain conditions:

- Customizable movable objects: These can be considered individualized due to their unique identification or accounting record. Examples include vehicles or even animals such as deer, which receive individual identification as a result of their registration. This is regulated in Article 28 (2) of the VAT Act.
- Primary production services: These are generally excluded from tax. In order to avoid shadow tax, taxpayers can deduct the reduced tax rate on the invoiced amount as input tax. This is described in Article 28 (3) of the VAT Act.

Documentation and verification

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Accurate documentation is crucial to justify the deduction of fictitious input taxes:

- Sales contract: This should clearly state the individualized aspects of the object.
- Invoices: Detailed invoices with details of the purchased items are required.
- Investment register: For items that are not intended for resale, a detailed investment list is recommended.

conclusion

The fictitious input tax deduction is an effective method for tax optimization. Through accurate documentation and verification, companies can ensure that they can justify the input tax deduction and can withstand possible audits. In case of uncertainty, it is recommended to consult a tax expert from MKY Treuhandpartner GmbH.

Your MKY Treuhandpartner GmbH

Source: Notional input tax deduction: For effective tax optimization

Disclaimer: The content of this blog post is for informational purposes only and does not constitute professional advice.

Each individual case should be reviewed individually and we recommend that you seek professional advice for specific questions.