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“Input Tax Deduction for Mixed-Use Items: Allocation Period.”

Items that are used for both business and non-business (private) purposes (so-called mixed-use items) can be

  • overall of the entrepreneurial activity,
  • Proportionately to the entrepreneurial area according to the actual entrepreneurial use or
  • to the full extent to the non-business (private) sector

be assigned. Depending on the allocation, an input tax deduction is possible in full, proportionally or not at all. However, the prerequisite for the input tax deduction is that the business use amounts to at least 10%.

The allocation decision is regularly made by claiming the input tax deduction, it should be made “promptly” and documented. From the point of view of the tax authorities, “promptly” usually means in the context of the advance return for sales tax, at the latest in the period up to July 31. of the following year submitted annual sales tax return. If the annual VAT return with the corresponding input tax deduction is not submitted until later, the input tax deduction with regard to the mixed-use item is excluded because the allocation to the business assets no longer took place in a timely manner.

However, the Federal Fiscal Court is still having the European Court of Justice examine whether the loss of the input tax deduction when the allocation period is exceeded violates EU law.