The deduction of input VAT and income-related expenses may be permitted even before income from letting is generated.<\/p>\n
The deduction of input VAT and income-related expenses arising from the purchase or construction of a building is permitted even before income is generated from letting the building, provided that the property in question is actually let in future or, from a VAT perspective, is let subject to VAT. The intention to generate income from letting must be clearly evident to outsiders. A property owner had begun construction of a building in 2013 and, from that point onwards, claimed annual income-related expenses and input VAT deductions in connection with the property for tax purposes. The owner stated to the tax office that he intended to generate income from letting and leasing but did not enter into any binding agreements with potential tenants during the period in question.<\/p>\n
Similarly, contracts for the installation of an air-conditioning system were not awarded until 2025. In 2025, the final VAT and income tax assessment notices for the years 2013 to 2022 were issued; however, these did not recognise the input VAT or income-related expenses claimed. After the appeal lodged against this decision was dismissed by the tax office as unfounded, the property owner applied for the Federal Finance Court (BFG) to rule on the appeal.<\/p>\n
There was no intention to let the property.<\/strong><\/p>\n As the property owner had neither entered into a binding agreement to let the property nor taken any other such action<\/strong>, the Federal Finance Court (BFG) held that, in the present case, there was no objective intention to let the property. Furthermore, the BFG did not regard the property owner\u2019s conduct as purposeful, given that, for example, the installation of the air-conditioning system was not commissioned until 12 years after construction began. The income-related expenses were therefore not deductible.<\/p>\n With regard to input VAT deduction, the Federal Finance Court (BFG) held that, whilst the provision of services is not yet an absolute prerequisite for this, it is necessary for the activity undertaken to be genuinely aimed at providing services for consideration and for this to be apparent to outsiders<\/strong>.<\/p>\n In the context of letting activities, input VAT may therefore be considered for VAT purposes even before the income is actually received, provided there is a binding agreement going beyond mere intention or some other corresponding circumstance. The mere existence of a planning permission or the taking out of a loan is not, in itself, sufficient to establish the status of a taxable person for VAT purposes. In the view of the Federal Finance Court, the owner was therefore not entitled to an input tax deduction.<\/p>\n","protected":false},"excerpt":{"rendered":" The deduction of input VAT and income-related expenses may be permitted even before income from letting is generated. The deduction of input VAT and income-related expenses arising from the purchase or construction of a building is permitted even before income is generated from letting the building, provided that the property in question is actually let […]<\/p>\n","protected":false},"author":5,"featured_media":30368,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-30415","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-frontpage"],"acf":[],"yoast_head":"\n