GermanyManual

Value Added Tax in local language is "Mehrwertsteuer" and the acronym VAT is translated as "MWSt".

German VAT deduction limits

Unlike most EU countries, Germany only restricts VAT deduction on a few items. In general, input VAT incurred in the course of a business in hotel expenses, restaurants, attendance to conferences, telephone, taxi or entertainment is 100% deductible.

The following items are not VAT deductible:

  • Gifts to non-employees with a value over 35€ a year
  • Luxury goods

Any other input VAT is fully deductible as long as it is incurred as part of a business activity. Where the business use of an item is below 10%, this item is generally not deductible.

Input VAT prior to start a business (e.g. before a VAT registration) may be deductible, however, this should be agreed with the competent tax office, particularly for material amounts.

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