Are there differences in input tax between different industries?
January 12, 2022 | 30,00 EUR | answered by Marco Schottmann
Dear Tax Advisor,
I am Greta Ehrig and I run a small business in the service industry. Lately, I have been focusing on the topic of input tax as I am unsure if there are differences in input tax between different industries. I have already done some research and found that there are industry guidelines that specify which expenses are deductible as input tax and which are not.
Currently, my situation is as follows: My company provides services that are mostly subject to VAT. I regularly have expenses for materials, office supplies, and other operational costs for which I want to claim input tax. However, I am unsure if there are specific regulations or peculiarities that apply to service companies and which I am not aware of.
My concerns are that I may be deducting input tax amounts incorrectly, potentially resulting in tax payments or other consequences. Therefore, I am wondering if there are differences in input tax between different industries and if there are specific points that service companies need to consider.
Could you please provide me with information on whether there are industry-specific differences in input tax and what peculiarities I should consider as a service company? For example, are there specific expenses that can only be deducted as input tax in my industry? I would greatly appreciate a well-informed response and any recommendations for action.
Thank you in advance.
Best regards,
Greta Ehrig
Dear Mrs. Ehrig,
Thank you for your inquiry regarding input tax as a service company. It is understandable that you are concerned about the deductibility of input tax amounts, as this can have a direct impact on your tax situation.
It is important to know that input tax is treated equally for all companies, regardless of the industry. This means that generally all entrepreneurs can claim input tax that is invoiced to them by their suppliers. This includes expenses such as materials, office supplies, rent for business premises, services from external service providers, and other operational expenditures.
It is important to note that input tax is only deductible for expenses that are business-related. Private expenses are not deductible. In addition, invoices must be correctly issued in order for the input tax to be claimed.
There are no specific regulations or peculiarities that apply only to service companies in terms of input tax. The deductibility of input tax is rather based on general tax regulations and guidelines.
However, there are certain expenses that are not deductible as input tax, such as entertainment costs, gifts to customers or employees, vehicle costs that are not exclusively used for business purposes, and private expenses. It is important to carefully assess which expenses are deductible and which are not to avoid potential errors.
To ensure that you correctly deduct input tax and avoid potential tax repayments or other consequences, I recommend keeping your records carefully and regularly consulting with a tax advisor. A tax advisor can also help clarify any uncertainties and inform you about specific tax aspects for your company.
I hope I have answered your question comprehensively and am available for any further questions.
Best regards,
Marco Schottmann
