VAT: Deduct notional input tax

The notional input tax can be deducted, even though there is no actual input tax, just a notional one.

Deducting Notional Input Tax

The notional input tax deduction is possible in two cases. First, for agricultural, forestry, etc. products that are not subject to VAT, and second, when purchasing used customisable movable goods for delivery to a domestic customer.

The notional input tax deduction for the procurement of raw agricultural products, livestock, or milk without VAT is 2.5% according to Art. 28 para. 2 VAT Act. For the input tax deduction to be possible, the following conditions must be met cumulatively:

1. The residence or business premises and economic buildings are located domestically.
2. The procurement of the raw product occurs without VAT being charged, i.e., no tax shifting has occurred.
3. The products are procured as part of the business activities eligible for the input tax deduction.
4. The taxable person must be able to prove the claim for the notional input tax deduction with suitable evidence.

Notional Input Tax Deduction for a Used Item

A taxable person can make a notional input tax deduction on a used, customizable movable item, provided the delivery is to a domestic customer.

The conditions for the notional input tax deduction are:

1. It is a used, customisable movable item.
2. The procurement of the item is intended for delivery to a domestic customer.
3. The procurement occurs as part of the business activities eligible for the input tax deduction.
4. The procurement of the item occurs without VAT burden.
5. The reporting procedure according to Art. 38 VAT Act must not have been applied.
6. The item must not have been imported from abroad.
7. The taxable person must prove that a claim for the notional input tax deduction exists.

The applicable tax rate at the time of procurement is decisive in calculating the input tax deduction. The purchase price is considered inclusive of VAT.

Further information on this topic can be found on the homepage of the Federal Tax Administration.