Input VAT Deduction in Germany 2026: How GmbH Owners and Freelancers Reclaim VAT

If you run a business in Germany and charge VAT (Umsatzsteuer) to customers, you are generally entitled to reclaim the VAT you paid on your own business expenses. This mechanism is called the Vorsteuerabzug — input VAT deduction. In theory it sounds straightforward; in practice there are many traps. This article explains who qualifies, what conditions must be met, and what commonly goes wrong.

What is the Vorsteuerabzug (Input VAT Deduction)?

Under § 15 UStG (German VAT Act), businesses can deduct the VAT shown on incoming invoices from their own VAT liability. You only pay the difference to the Finanzamt — or receive a refund if your input VAT exceeds your output VAT.

Example: You buy office supplies for €119 (including €19 VAT). You deduct that €19 from your VAT liability. If you collected €50 in output VAT from customers in the same month, you pay only €50 − €19 = €31 to the Finanzamt.

Who Is Entitled to Deduct Input VAT?

Any business (Unternehmer) under § 2 UStG is generally entitled. This includes:

• GmbH and UG (limited liability companies)
• Sole traders and freelancers (Freiberufler) — if VAT-registered
• Partnerships (OHG, KG, GbR)

NOT entitled: Kleinunternehmer (small business owners under § 19 UStG) and businesses with exclusively VAT-exempt revenues (e.g. doctors, insurance providers).

Requirements for Input VAT Deduction

All of the following conditions must be met:

1. You are a registered VAT business (Unternehmer § 2 UStG), not a Kleinunternehmer.
2. The supply or service was used for your business (not private use).
3. You hold a proper invoice containing all mandatory details per § 14 UStG.
4. The supplier has a valid tax number or VAT ID.
5. The supply is not VAT-exempt under § 4 UStG.

Important: An invoice with missing mandatory fields does not entitle you to deduct input VAT. Always verify invoices before booking them.

What Is NOT Deductible?

§ 15 Abs. 1a and 1b UStG exclude certain expenses even when the invoice is correct:

• Business entertainment (Bewirtungskosten): Only 70 % of input VAT is deductible
• Private expenses: No deduction for goods or services used privately
• Gifts over €50 net per recipient per year: Not deductible
• Mixed-use assets: Input VAT must be apportioned between business and private use (§ 15 Abs. 4 UStG)

Input VAT on Company Cars

Input VAT from purchase or leasing is deductible if the car is predominantly used for business. For mixed use, the private portion must be calculated — either via logbook (Fahrtenbuch) or the 50 % flat estimate (VAT method). For GmbH: the car belongs to company assets; private use by the managing director is taxable as a benefit in kind or hidden profit distribution (vGA).

Booking Input VAT in Accounting (SKR03 / SKR04)

In double-entry bookkeeping, deductible input VAT is recorded on the Vorsteuer account:

• SKR03: Account 1570 — Deductible input VAT 19 %
• SKR04: Account 1400 — Deductible input VAT 19 %

Input VAT is reported in the UStVA under field 66. Norman automates these bookings and pre-fills the UStVA — you just review and submit.

Claiming Input VAT in the UStVA and Annual Return

Input VAT is claimed monthly or quarterly via the UStVA. If your input VAT exceeds your output VAT for a period, the Finanzamt issues a refund — typically within a few weeks. The annual VAT return (Umsatzsteuerjahreserklärung) reconciles all advance returns at year-end.

Automate Input VAT with Norman

Norman automatically extracts input VAT amounts from incoming invoices, posts them to the correct account, and includes them in your UStVA. The AI bookkeeping feature eliminates manual data entry and reduces audit risk. Self-employed users can also benefit from Norman's tax automation for the self-employed.