GlossaryEN1 min readUpdated: Jun 18, 2026

input tax reduction

Businesses – including freight forwarders, carriers, and importers – must apply an input tax reduction whenever goods or services are not used exclusively for taxable business purposes.

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Last updated: 18 June 2026Published: 27 January 2026

Source: https://de.wikipedia.org/wiki/Vorsteuer

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Definition & Explanation

Businesses – including freight forwarders, carriers, and importers – must apply an input tax reduction whenever goods or services are not used exclusively for taxable business purposes. In such cases, only a proportional deduction of input tax is allowed; the reduction rate is determined either by a statutory pro-rata formula or by the actual business-use percentage. Common triggers include mixed-use vehicles, entertainment expenses, and premises with partial private use. Input tax reduction is distinct from an input tax correction, which adjusts previously claimed deductions retrospectively, and from a complete denial of deductibility.

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input tax reduction

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