Germany MOF Clarifies Input VAT Deduction for Transition Between Small Business Regulations, Standard Taxation

The German Ministry of Finance Nov. 10 posted BMF Letter No. COO.7005.100.4.13426844, clarifying input tax deduction rules for small business owners transitioning between small business regulations and standard taxation. Topics covered include: 1) excluding input tax deductions for services received and used before transitioning to standard taxation, including for advance and down payment invoices; 2) allowing input tax adjustments when deductions couldn’t be claimed before the transition, subject to de minimis thresholds; 3) amendments to the VAT Application Decree based on this clarification; and 4) a transitional rule permitting reliance on the previous version of the VAT Application Decree, for ...