GlossaryEN1 min readUpdated: Jun 19, 2026

input VAT deduction rate

The input VAT deduction rate is the proportion of input tax that a business is legally entitled to recover from the tax authority.

Quick Answer

Last updated: 19 June 2026Published: 27 January 2026

Source: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Mehrwertsteuer/Mehrwertsteuer.html

Category

Incoterms 2020 Simulator: Who bears costs & risk?

Reading time

1 min

Words

121

Mentioned in

–

Definition & Explanation

The input VAT deduction rate is the proportion of input tax that a business is legally entitled to recover from the tax authority. It applies whenever a company makes both taxable and exempt supplies, or when expenditure serves mixed business and private purposes — in either case, only a proportionate share of input VAT may be reclaimed. The rate is typically calculated by comparing taxable turnover with total turnover and is reviewed at least annually. In pure freight forwarding and logistics operations, it generally reaches 100 percent, since those activities are fully VAT-able; mixed-activity businesses may face considerably lower rates. The deduction rate should not be confused with a full input VAT prohibition, which bars specific expense categories from recovery altogether.

Next steps

Tools that match this term

Compare IncotermsClarify duties, cost and riskOpen Find HS codeDetermine the tariff number for customsOpen Calculate customs valueWork out import duties and customs valueOpen Calculate transit timeEstimate duration per transport modeOpen

Related Terms

You might also be interested in these terms

restriction/limitation of the right to deduct input tax (VAT)

Unlike a full exclusion or loss of the deduction right, restriction of the right to deduct input tax (VAT) limits the recoverable …

Learn more

import VAT

When a shipment arrives from abroad and is presented to customs for entry, import VAT falls due immediately: the tax is calculated…

Learn more

Right to deduct input tax

A typical case: an importer receives an invoice for €10,000 plus €1,900 input VAT. The business can claim this €1,900 input VAT if…

Learn more

input tax reduction

Businesses – including freight forwarders, carriers, and importers – must apply an input tax reduction whenever goods or services …

Learn more

Break-Even Freight Pricing Models

When a carrier or freight forwarder needs to set a floor price for a shipment, break-even freight pricing models provide the analy…

Learn more

Long-Term Freight Rate Forecasting

Unlike short-term spot rate monitoring, long-term freight rate forecasting examines structural price drivers over horizons of one …

Learn more

⚖️ ICC Incoterms 2020

Incoterms 2020 Simulator: Who bears costs & risk?

Analyze all 11 Incoterms 2020: cost matrix, risk timeline, insurance gap detector and customs responsibility – free, no login required.

Incoterms Simulator →

Logistics knowledge straight to your inbox

Weekly: Top news, industry facts and insights from the world of logistics – free.

input VAT deduction rate

Next steps

Related Terms

restriction/limitation of the right to deduct input tax (VAT)

import VAT

Right to deduct input tax

input tax reduction

Break-Even Freight Pricing Models

Long-Term Freight Rate Forecasting

Incoterms 2020 Simulator: Who bears costs & risk?

Logistics knowledge straight to your inbox

Community Questions & Answers