How can I correctly allocate input tax in cases of mixed usage?
November 1, 2022 | 30,00 EUR | answered by Tobias Waldmüller
Dear tax consultant,
My name is Babette Endres and I run a small business that sells office supplies online. Currently, I use both private and business premises to carry out my activities. In order to claim input tax, I am faced with the challenge of correctly allocating input tax in cases of mixed use.
The current situation is as follows: I work both professionally and privately in my home office. I purchase office supplies that I use for both my business and personal use. Since I cannot make a precise allocation between professional and private use, I do not know how to correctly allocate the input tax.
My concern is that I may allocate the input tax incorrectly and thus have issues with the tax office. I want to make sure that I take advantage of all tax possibilities and avoid making mistakes.
Therefore, my question to you is: How can I correctly allocate input tax in cases of mixed use? Are there specific criteria or methods that I can use for allocation? What documentation do I need to make the allocation of input tax understandable?
Thank you in advance for your help and support.
Best regards,
Babette Endres
Dear Mrs. Endres,
Thank you for your inquiry regarding the allocation of input tax in cases of mixed use. It is understandable that you are concerned about this, as the correct allocation of input tax plays an important role in the tax handling of your business.
In your case, where you use both private and business premises and office supplies for both professional and personal purposes, the allocation of input tax is indeed a challenge. It is important that you make a plausible and transparent allocation to avoid issues with the tax authorities.
One way to allocate input tax in cases of mixed use is to estimate it using objective criteria. For example, you could calculate the area of your home office in relation to the total area of the apartment to determine the professional share. The time you spend working in your home office could also be used as a criterion. It is important that you document the criteria chosen and the method of allocation to be able to explain them clearly in case of an audit by the tax authorities.
Another option is to allocate input tax based on actual consumption. This means that you can claim the full input tax for office supplies used exclusively for your business. For office supplies used both professionally and personally, you could estimate the professional share and deduct it as input tax accordingly.
It is important that you keep all receipts and invoices carefully and document the allocation of input tax transparently. This way, you can explain your approach and the allocation of input tax convincingly in case of an audit by the tax authorities.
I hope this information has been helpful to you. If you have any further questions or need assistance, please feel free to contact me.
Best regards,
Tobias Waldmüller
