How is the input tax treated when I purchase goods within the EU?
February 24, 2022 | 30,00 EUR | answered by Phillip Buchner
Dear tax consultant,
My name is Ralf Schwaru and I own a small business that regularly purchases goods within the EU. So far, I have not delved deeply into the treatment of input tax on intra-Community supplies and would like to learn more about it.
Currently, I am unsure of how to correctly treat the input tax for my purchases within the EU. I wonder if I can even claim the input tax and what steps I need to take. I also worry about potential consequences if I handle the input tax incorrectly, and how I can rectify any errors.
Could you please explain to me how input tax is treated for intra-Community purchases? Are there specific regulations I need to adhere to? What steps do I need to take to correctly invoice the input tax?
Thank you in advance for your support and I hope for a comprehensive explanation on this topic.
Sincerely,
Ralf Schwaru
Dear Mr. Schwaru,
Thank you for your inquiry regarding the treatment of input tax on intra-community supplies. It is important that you familiarize yourself with this topic, as correctly accounting for input tax on your purchases within the EU is crucial to taking advantage of potential tax benefits and avoiding any errors.
For intra-community purchases, you can generally claim the input tax that is invoiced to you when acquiring goods and services in other EU member states. It is important to note that input tax is only deductible if it is used for business purposes. This means that the purchases must be made within the scope of your business.
To correctly account for input tax, you need to collect and retain the relevant invoices. These invoices must contain certain information, such as your VAT identification number (VAT ID) and that of the supplier, the amount of input tax, and other mandatory information according to the EU VAT directive.
There are also specific regulations to consider, particularly regarding the VAT treatment of intra-community supplies. For such transactions, you must have a valid VAT ID of the supplier and the goods must be delivered to another EU country. Additionally, a Recapitulative Statement (RS) is required to document the intra-community supplies.
Incorrect treatment of input tax can lead to tax consequences, such as additional payments or penalties. To correct any mistakes, you should promptly consult your tax advisor, who can assist you in resolving and rectifying the issue.
I hope this information is helpful to you and supports you in correctly accounting for input tax on your intra-community purchases. If you have any further questions, please feel free to contact me.
Best regards,
Phillip Buchner
