VAT: Delimitation of self-consumption - Input tax adjustment

For all service receipts by the business owners for private use, a prior tax correction must be made, provided that the input tax was claimed when these services were procured. This blog post explains why this aspect is particularly important for entrepreneurs.

Business owners of sole proprietorships often supply themselves and their relatives with products/services they produce, since they can benefit from lower prices. As the "final consumer" of their own products, however, they may not deduct the input tax on the corresponding part of the expenses. Therefore, an input tax correction (in the sense of reducing the input tax deduction) must be made for said service receipts. Entrepreneurs need to distinguish personal service receipts (self-consumption) from product sales.

However, such a clear distinction is often difficult to implement in reality. For example, taking goods from one's own grocery store or using the company car for private purposes are cases in point. To simplify these complicated cases, the tax law uses flat-rate deductions for business owners and their relatives.

More detailed information on the topic of input tax deduction and input tax correction can be found on the website of the Federal Tax Administration ESTV.