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Hi all,
Are there some cases in Germany, when we should use non-deductible Vat?
In this case we should add vat amount to the cost of goods or expenses, so the cost of goods or expenses increases .
Now i can not find such cases.
Thanks in advance.
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Hello Anna,
There is one special case that comes to my mind where you have to be careful.
That is, when your boss invites a customer to a business lunch or dinner, only 70% of the total expense is tax deductible. From an accounting perspective you have to separate the total expense and record it on two different accounts; one for the tax deductible part and another one for the non tax deductible part. This does, however, only affect the deductibility of the expense for business taxation purposes!
VAT is different in this case, that is, even though only 70% can be considered as a business expense the whole VAT is currently deductible. So from a VAT perspective all is fully deductible.
Another interesting case is when business assets are used in a mixed mode for business and private purposes. You sometimes have this if the owner of a company uses a car as a business car but uses the same car also for private purposes. In this case you are only allowed to deduct a fraction of the expense from business tax - depending on the business usage. The same applies for the VAT. So, this case is similar in nature from the business lunch example but allows only a partial deduction of the VAT.
Overall, you will find non-deductible VAT usually in private owned companies and/or where there is a mixed use of business and private usage. With D365FO and the previous AX version, I never came across such a case in practice as D365Fo and AX are usually implemented in larger companies where you do not run into this business vs. private usage issue.
Note: There are often disputes when it comes to such situations and if you have a very concrete business case, I would recommend talking with your tax advisor to ensure a correct treatment from a business tax and VAT tax perspective.
Hope this answers your question.
Best regards,
Ludwig
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