– The taxpayer acquired a multi-unit building in July 2011 and immediately undertook thermal renovations and converted the attic, creating two additional apartments.
– One of the new attic apartments, comprising about 70% of the attic space and 18% of the total building area, was used by the taxpayer and his family for private purposes.
– The taxpayer claimed the full input tax deduction for the renovation and conversion costs.
– During a tax audit in 2016, the tax authorities disallowed the input tax deduction for the portion of the costs attributable to the privately used apartment.
– In November 2018, the taxpayer began renting out the previously privately used apartment commercially.
– The court ruled that this change in use triggered a positive input tax adjustment under § 12(10) of the Austrian VAT Act for the 2019 tax year.
– The court rejected the tax authority’s argument that this was an inadmissible input tax deduction for a private asset brought into the business.
– Under Austrian law, mixed-use assets are generally attributed fully to the business, unless the taxpayer notifies the tax authorities otherwise.
– The court distinguished its previous case law, which had denied subsequent input tax deductions for assets brought from the private sphere into the business.
– The court held that the input tax deduction rules must be interpreted in line with EU law, which allows the taxpayer to choose how to treat a mixed-use asset.
Source: lexisnexis.at
