- The German Federal Fiscal Court (BFH) ruled that entrepreneurs cannot claim input tax deduction for civilian clothing if the expenses are considered essential for private living.
- The court referred to a previous BFH ruling from March 2022 (VIII R 33/18) and stated that the deduction is prohibited under § 15 Abs. 1a Satz 1 UStG in conjunction with § 12 Nr. 1 EStG.
- It remains unclear whether this deduction prohibition is in line with EU law.
- The case involved a couple who worked as funeral speakers and claimed input tax deduction for clothing acquisition and cleaning costs.
- The tax office rejected the deduction, and the couple appealed to the Berlin-Brandenburg Fiscal Court, which ruled in favor of the tax office.
- The couple then filed a revision with the BFH, which dismissed their appeals as unfounded.
- The court ordered the couple to bear the costs of the revision proceedings.
- The case was referred to as XI R 3/22 and the previous ruling was VIII R 33/18.
Source: bundesfinanzhof.de
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
