VAT allocation of mixed-use assets

As long as the allocation of mixed-use assets has been clearly documented within the documentation period, the tax office can be notified of the allocation decision even after the deadline has expired.

In two landmark rulings, the Federal Fiscal Court has changed its case law and decided that it is not necessary to notify the tax office of the allocation of mixed-use assets within the deadline in order to obtain the input tax deduction from the acquisition costs. If there are objectively recognizable indications of an allocation within the documentation period, these can be communicated to the tax office even after the deadline has expired. Clear documentation within the deadline is therefore crucial.

In the cases in dispute, the Federal Fiscal Court considered the conclusion of a feed-in contract for a new photovoltaic system and the designation of a room as a study in building application documents in the case of a new building to be indications of a business allocation. However, an overall assessment of the evidence is decisive. The allocation in the advance VAT return can also be changed at a later date, even if it contradicts the allocation to the business in terms of content. The rulings were preceded by a referral to the European Court of Justice, which considered an allocation deadline to be permissible, provided that the consequences of failing to meet the deadline are proportionate.