The German Federal Fiscal Court ruled in July 2025 that input VAT on renovation costs for a historic castle is deductible when the property is intended for taxable rental activities, regardless of whether the renovation was financed through grants or donations. The ruling confirms that profitability is not required for taxable person status.
Yes, the German Federal Fiscal Court confirmed that input VAT on renovation costs is deductible when the property is intended for taxable rental activities such as guest accommodations, events, or museum space.
No, the court ruled that how acquisitions are funded (whether through donations or grants) does not affect input VAT deductibility—only the intended use of the property matters.
No, the BFH confirmed that a typical market-oriented act as a taxable person remains valid even in case of losses, meaning profitability is not required for VAT purposes.
The ruling emphasises that comprehensive documentation of intended taxable use at the time of acquisition is essential for securing input VAT deductions.
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Meyka · 6 days ago
German economists warn that a shift from the current 19% VAT to 21% is possible amid weak growth and tight budgets. A 21% rate would raise gross prices of VAT‑able goods by about 1.68% and create a short‑term inflation bump, especially impacting discretionary sectors such as retail, e‑commerce, and hospitality.
e-invoice.app · 6 days ago
Germany’s national e‑invoicing mandate requires all businesses to receive structured invoices from January 2025 and to transmit them by revenue thresholds, with full coverage by January 2028. The system accepts XRechnung, ZUGFeRD and Peppol BIS formats, all EN 16931 compliant, and mandates 8‑year electronic archiving under GoBD. Non‑compliance can trigger VAT deduction denial, GoBD violations and administrative fines.
TaxAndBytes · 9 days ago
The post highlights that the German BMF letter dated 15 Oct 2025 requires e‑invoices to be fully and correctly validated for VAT recognition. It points out common validator shortcomings—such as incomplete EN 16931 checks, superficial VAT checks, and lack of audit‑proof documentation—and warns that many validators only verify the existence of data fields, allowing invoices with missing content to be accepted.
NWB · 22 days ago
This guidance explains that German businesses can apply to extend the deadline for filing VAT returns by one month. If the extension is used, a special advance payment equal to one‑eleventh of the previous year’s advance payments must be paid, and it is credited in the December advance payment calculation. The special payment can be corrected upon application if expected VAT changes due to a rate change.
Bloomberg Tax · about 1 month ago
The German Ministry of Finance clarified rules on input VAT deductions for subsidized service providers that operate at persistent loss. The BMF Letter states that such providers cannot deduct input VAT for services unrelated to taxable activity and must satisfy a two‑step test linking remuneration to performance and confirming economic activity. The letter also amends the VAT Application Decree.
LinkedIn Article by Axalv Truiq Labs · about 1 month ago
The German e-invoicing market is projected to grow from USD 15.2 billion in 2024 to USD 41.86 billion by 2033, driven by EU Directive 2014/55/EU and a 13.5% CAGR. Cloud-based solutions dominate the market, holding over 70% share, while large corporations represent about 60% of the market and SMEs are rapidly expanding. The analysis highlights regulatory mandates, market segmentation, and strategic opportunities for technology providers.
