GlossaryEN1 min readUpdated: Jun 19, 2026

Restriction on input VAT deduction

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Last updated: 19 June 2026Published: 27 January 2026

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

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Logistics Concept

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Definition & Explanation

Restrictions on input VAT deduction come into play as soon as a business performs both taxable and exempt supplies or uses assets for mixed purposes: the right to deduct is not eliminated, but capped at the taxable proportion or deferred over time. Common triggers include vehicles or buildings serving mixed purposes, or freight forwarders that combine taxable transport services with exempt financial intermediation. The restriction is typically applied on a pro-rata basis — calculated from the ratio of taxable to total turnover — and must be reviewed periodically. Unlike a full input VAT prohibition, the deduction right itself survives; it is curtailed, not removed.

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Restriction on input VAT deduction

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