GlossaryEN1 min readUpdated: Jun 18, 2026

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 amount to the share attributable to taxable supplies.

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Last updated: 18 June 2026Published: 27 January 2026

Source: https://www.gesetze-im-internet.de/ustg_1980/__15.html

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Logistics Concept

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Definition & Explanation

Unlike a full exclusion or loss of the deduction right, restriction of the right to deduct input tax (VAT) limits the recoverable amount to the share attributable to taxable supplies. It applies when a business carries out both taxable and VAT-exempt activities—commonly described as mixed-use or partially exempt status. The deductible proportion is determined by a statutory or administratively agreed apportionment key, most often a turnover-based pro-rata ratio. In freight forwarding and logistics, this situation arises when a company combines standard-rated transport services with VAT-exempt activities such as certain insurance or financial intermediation services. The applicable pro-rata rate must typically be reviewed and recalculated on an annual basis.

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

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Related Terms

Right to deduct input tax

retroactive claim for input tax entitlement

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denial of input tax refund

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