Input VAT: what it is, who may deduct it and how the VAT payable arises
In short
Input VAT (Vorsteuer) is the VAT a business pays on its own incoming invoices. It may be deducted from the VAT the business has charged its own customers (§ 15 UStG). The difference between the two is the Zahllast, the amount paid to the tax office; if the input VAT is higher, the tax office refunds the difference. Small businesses under § 19 UStG have no input VAT deduction.
As of September 2026. All examples use the standard German VAT rate of 19 %.
What is input VAT?
Input VAT is the VAT a business pays on its own incoming invoices and can reclaim from the tax office. It is not a separate tax but the same VAT, seen from the buyer's side.
The principle behind it is the core of the German VAT system: economically the tax should fall only on the final consumer. Businesses pass it along the chain. So that a business does not bear the VAT charged by its suppliers, it may deduct that VAT as input VAT (§ 15 UStG).
One sentence of example: if you buy a laptop for 1.190,00 € gross, 190,00 € of VAT is contained in it. Those 190,00 € are your input VAT and you reclaim them from the tax office.
Input VAT, output VAT and Mehrwertsteuer: the terms
All three describe economically the same tax but differ in perspective:
| Term | Perspective | Example |
|---|---|---|
| Umsatzsteuer (output VAT) | the tax you charge your customers and remit | you invoice 5.950,00 € gross, of which 950,00 € is VAT |
| Vorsteuer (input VAT) | the tax you pay on your own incoming invoices | you buy for 1.190,00 € gross, of which 190,00 € is input VAT |
| Mehrwertsteuer | colloquial umbrella term, not used in the UStG | "incl. 19 % MwSt" on a till receipt |
Terminology, as of September 2026.
The word Mehrwertsteuer does not appear in the statute at all; the law consistently says Umsatzsteuer. Whether a supply is taxed at 19 % or 7 % is covered in the guide on 7 % or 19 % VAT.
How does the input VAT deduction work?
The deduction is governed by § 15 (1) sentence 1 no. 1 UStG. Four conditions have to come together:
- You are a business within the meaning of § 2 UStG and subject to normal taxation.
- The supply was acquired for your business, not privately.
- A proper invoice exists containing the mandatory content of §§ 14, 14a UStG.
- The supply was actually carried out and you hold the invoice.
If any one of these is missing, there is no deduction. In practice the usual stumbling block is point 3: a formally incomplete invoice.
Input VAT is not refunded the moment you pay it; it is offset. You declare it in your VAT return and deduct it there from your own output VAT.
How do I calculate the VAT payable?
The Zahllast is the amount you actually transfer to the tax office:
VAT payable = output VAT collected − deductible input VAT
A complete monthly example:
| Item | Gross | Net | Tax share |
|---|---|---|---|
| Your sales invoices | 5.950,00 € | 5.000,00 € | 950,00 € output VAT |
| Your laptop purchase | 1.190,00 € | 1.000,00 € | 190,00 € input VAT |
| VAT payable | 760,00 € |
Worked example for one return period at 19 % VAT.
You therefore remit not 950,00 € but 950,00 € − 190,00 € = 760,00 €.
The legal basis is § 16 (2) sentence 1 UStG: the deductible input VAT falling within the period is set off against the tax calculated.
If the input VAT exceeds the output VAT, the figure turns negative. Colloquially that is a Vorsteuerüberhang, an input VAT surplus; the official form calls it an Überschuss. The tax office refunds the difference. This is typical in the start-up phase or in months with large purchases.
Net, gross and the tax share have to be right on every invoice, otherwise the VAT payable is wrong too. The VAT calculator from Mein MwSt-Rechner converts in both directions in seconds, and MwSt rausrechnen extracts the tax share from a gross amount.
Which invoices qualify for the deduction?
Only an invoice that meets §§ 14, 14a UStG. If a mandatory field is missing, the tax office can deny the deduction. The mandatory content includes the name and address of both parties, the supplier's tax number or VAT identification number, the invoice date, a sequential invoice number, a description of the supply, the date of supply, the net amount, the tax rate and the tax amount. The full list is under writing an invoice.
Two important special cases:
- Small-amount invoices up to 250,00 € gross. Under § 33 UStDV fewer details suffice: the supplier's name and address, the invoice date, the quantity and type of supply, the gross amount and the tax rate or a reference to the exemption. No invoice number and no customer details are required.
- An invoice from a small business. It gives no input VAT deduction, because a business under § 19 UStG shows no VAT at all. Where no tax is shown, none can be deducted. More on this in the small-business scheme guide.
If the invoice is reduced by an early-payment discount, the deductible input VAT falls proportionally as well (§ 17 (1) UStG). The Skonto guide works through the numbers.
When is input VAT not deductible?
Three groups are excluded:
- Private expenditure. Anything not acquired for the business gives no deduction. For mixed-use items only the business share counts.
- Exempt output supplies. A business making exempt supplies that carry no right to deduct, such as certain medical treatments or lettings, cannot deduct the related input VAT (§ 15 (2) UStG).
- Certain non-deductible business expenses. § 15 (1a) UStG blocks input VAT on expenditure that is non-deductible for income tax purposes, such as gifts above the threshold or costs of private life.
A widespread misconception concerns business entertainment: for income tax only 70 % of reasonable entertainment costs are deductible as a business expense. For VAT purposes the input VAT is unaffected and remains fully deductible, provided the entertainment is reasonable and properly documented. The 70/30 split therefore does not apply to input VAT.
Input VAT under reverse charge and on imports
Under the reverse charge procedure the recipient, not the supplier, owes the VAT (§ 13b UStG). The recipient declares that tax and deducts the same amount as input VAT, provided they have a full right of deduction. The net effect is zero.
Example: you buy advertising services for 100,00 € net from a supplier abroad. You declare 19,00 € of VAT under § 13b UStG and deduct the same 19,00 € as input VAT. The VAT payable from this transaction is 0,00 €. Declaring it is nonetheless mandatory.
Imports from a third country work similarly: the import VAT levied by customs is deductible as input VAT under § 15 (1) sentence 1 no. 2 UStG.
Input VAT in the VAT return
In the German VAT return you enter output supplies and deductible input VAT separately. In the official 2026 form two code numbers matter most:
| Code | Content | Basis |
|---|---|---|
| 66 | Input VAT from other businesses' invoices | § 15 (1) sentence 1 no. 1 UStG |
| 67 | Input VAT from supplies under § 13b UStG | § 15 (1) sentence 1 no. 4 UStG |
| 62 | Import VAT incurred | § 15 (1) sentence 1 no. 2 UStG |
Input VAT code numbers in the 2026 German VAT return form.
The relevant period is the one in which both the supply was carried out and the proper invoice is held. If the invoice arrives later, the input VAT belongs in that later period, not retroactively in the month of the supply.
If you missed an input VAT amount, you can correct it through the annual VAT return or an amended return, as long as the tax assessment period for that year has not yet expired.
Sources
Frequently asked questions
Is input VAT the same as output VAT?
Economically yes, it is the same tax from two angles. It is called output VAT when you charge it to your customers and remit it. It is called input VAT when you pay it on an incoming invoice and reclaim it from the tax office. The difference between the two is your VAT payable.
Who may deduct input VAT?
Only businesses within the meaning of § 2 UStG that are subject to normal taxation, acquire the supply for their business and hold a proper invoice under §§ 14, 14a UStG (§ 15 (1) UStG). Small businesses under § 19 UStG and private individuals are excluded from the deduction.
Can I claim input VAT without an invoice?
Generally no. An invoice containing all the mandatory fields of §§ 14, 14a UStG is a substantive condition of the deduction. For amounts up to 250,00 € gross a small-amount invoice with reduced details under § 33 UStDV is enough. A bank statement or payment receipt alone does not suffice.
What is a Vorsteuerüberhang?
An input VAT surplus arises when your deductible input VAT exceeds the output VAT you collected. The VAT payable then turns negative and the tax office refunds the difference. This is typical in the start-up phase or in months with heavy investment, for example after buying equipment or vehicles.
Do small businesses get input VAT back?
No. A business applying the § 19 UStG small-business scheme shows no VAT on its own invoices and in return has no input VAT deduction. The VAT paid on purchases is therefore a real cost. If you invest heavily, it is worth calculating whether waiving the scheme pays off.
Can I deduct input VAT from a small business's invoice?
No. An invoice under § 19 UStG shows no VAT, so none can be deducted. If a small business shows VAT by mistake, it owes that amount under § 14c UStG, but the recipient still has no right to deduct it as input VAT.
How does an early-payment discount affect input VAT?
If the customer takes Skonto, the consideration falls and the VAT with it (§ 17 (1) UStG). The recipient has to reduce the input VAT deducted accordingly. On 1.190,00 € gross with 2 % Skonto the deductible input VAT falls from 190,00 € to 186,20 €, effective in the month of payment.
How far back can I claim input VAT?
Input VAT belongs in the return period in which the supply and the proper invoice are both present. If it was overlooked, it can be picked up through the annual VAT return or an amended return, as long as the tax assessment period for that year has not yet expired.
