Germany Fiscal Court Clarifies Input VAT Adjustment on Repayment of Remuneration by Guarantors

The German Federal Fiscal Court Oct. 23 posted online Decision No. XI R 31/23, clarifying the input VAT adjustment upon repayment of remuneration by guarantors. The taxpayer entered into a contract and made a downpayment for the delivery and installation of a hall, which the supplier failed to deliver, leading to the repayment by a bank guarantor. The taxpayer sought to adjust the input VAT deduction due to the repayment by the bank guarantor. On appeal, the Federal Fiscal Court held that: 1) the repayment by the bank guarantor triggered a partial correction of the input VAT deduction; 2) even ...