Input VAT Deduction in Germany: Requirements, Invoices and Common Mistakes

When can you deduct input VAT?

You can deduct the VAT on an incoming invoice as input VAT (Vorsteuer) if another business has supplied goods or services for your business, you hold a proper invoice and no statutory exclusion applies. The right to deduct arises once the supply and the invoice exist. If a mandatory detail is missing, the tax office can deny the deduction.

As of October 2026. This is general information and does not replace tax advice.

Jump to: Requirements · Mandatory invoice details · When deduction is not possible · Worked example · Common mistakes

The five requirements at a glance

1. You are a business and the purchase serves your business.
2. The supplier is also a business and shows the VAT separately.
3. The supply is used for transactions that allow deduction. If the purchases serve VAT-exempt transactions, deduction is generally excluded.
4. You hold a proper invoice. The law ties the deduction to an invoice under sections 14 and 14a of the German VAT Act (UStG).
5. No exclusion: private use and certain statutory special cases are left out.

As a rule, the deduction arises in the filing period in which both the supply and the invoice exist. For advance payments, what matters is that you hold the invoice and have made the payment. That decides which VAT advance return the input VAT belongs in.

What the invoice must contain

An invoice only supports the deduction if it contains the mandatory details under section 14(4) UStG:

• full name and address of the supplier and the recipient,
• tax number or VAT identification number of the supplier,
• issue date and a sequential invoice number,
• quantity and type of goods, or scope and type of service,
• date of the supply or service,
• net amount, the tax rate applied and the tax amount on that net amount,
• a note on exemption or reverse charge where applicable.

Simplified requirements apply to invoices up to EUR 250 gross (small-amount invoices). Name and address of the recipient are not needed there, but the tax rate and amount must be recognisable.

Since 2025, German businesses must be able to receive e-invoices in a structured format. A PDF sent between domestic businesses generally no longer counts as an e-invoice. Please note that this article is written for German VAT rules.

When deduction is not possible or only partial

• Small businesses: Anyone under the small-business scheme (section 19 UStG) does not show VAT and cannot deduct input VAT on incoming invoices either.
• VAT-exempt transactions: If you make exempt supplies in whole or in part, for example certain medical treatments or letting, you can only deduct input VAT to the extent you make taxable supplies.
• Private use: If an item is partly used privately, only the business share belongs in the deduction.
• Special cases: Special rules apply to certain expenses such as entertainment or gifts. Clarify them in advance with your tax adviser.

If circumstances change later, for example through a different use of an asset, the input VAT deduction may have to be adjusted (section 15a UStG). The adjustment period is five years for movable assets and ten years for real property.

Worked example: what a faulty invoice costs

Fictional, simplified example: A company buys software consulting for EUR 5,000 net. The invoice shows EUR 950 VAT (19 percent) but neither the supplier's tax number nor the date of the service.

• Total invoice amount: EUR 5,950.
• Input VAT with a proper invoice: EUR 950, which reduces the amount due in the advance return.
• If mandatory details are missing, the tax office can deny the deduction until the invoice is corrected. The EUR 950 then initially stays in the company as a cost.

The amount is not lost once the invoice is corrected. But until then the company pre-finances the tax itself, and with tight liquidity that adds up quickly. Whether a corrected invoice takes effect retroactively depends on the individual case and current case law. You should clarify this with your tax adviser.

Avoiding common mistakes

1. Booking invoices unchecked: Check mandatory details against a checklist, ideally on every invoice.
2. Wrong recipient: If the invoice is addressed to another company or to you privately, the basis for the deduction is missing.
3. Input VAT in the wrong period: Claimed too early, it risks a correction. Forgotten, you give away liquidity.
4. Storing an e-invoice only as an image: The structured original must be kept and remain readable.
5. Not splitting mixed use: Private and business shares must be kept clearly apart.

If receipts pile up or closings come late, it is rarely a knowledge problem, usually a capacity problem. nugrow helps with Interim Accounting and FP&A.

Frequently asked questions

What are the requirements for deducting input VAT?

You must be a business, receive the supply from another business for your business, and hold a proper invoice. In addition, no statutory exclusion may apply, for example because of VAT-exempt transactions or the small-business scheme.

Can I deduct input VAT on an incomplete invoice?

The tax office can deny the deduction if mandatory details are missing. You can ask the supplier to correct the invoice. Whether the correction takes effect retroactively should be clarified with your tax adviser in the individual case.

Do small invoices have fewer requirements?

Yes. Simplified requirements apply to invoices up to EUR 250 gross. Name and address of the recipient are then not needed, but the tax rate and amount must be recognisable.

When is input VAT adjusted?

If the circumstances that were decisive for the deduction change, for example through a different use of an asset, an adjustment under section 15a UStG may be necessary. The adjustment period is five years for movable assets and ten years for real property.

Sources and status

Legal basis: section 15 UStG, section 14 UStG and section 15a UStG (German originals). Summary of practical rules based on Steuerschroeder: Vorsteuerabzug. The worked example was created by nugrow. Always check the current position with your tax adviser before filing. As of October 2026.