Section 4: Tax and input VAT

§ 15a Adjustment of input VAT deduction

(1) If, with respect to an asset that is used more than once for executing transactions, the circumstances decisive for the original input VAT deduction change within a period of five years as of the date of its first use, an adjustment is to be made for each calendar year following the change by correcting the input VAT deduction attributable to the acquisition and production cost. A period of ten years, instead of five years, shall apply in respect of immovable property, including its material components, and for entitlements, to which the regulations under civil law concerning immovable property are applicable, and for buildings on third-party land.

(2) If the circumstances decisive for the original input VAT deduction change with respect to an asset used only once for executing a transaction, the input VAT deduction must be corrected. The adjustment is to be made for the taxation period in which the asset is used.

(3) If an asset is subsequently absorbed into another asset and this asset thereby irrevocably loses its physical and economic characteristics or a supply of service is provided with respect to an asset, paragraphs 1 and 2 shall apply accordingly in the case of a change in the circumstances decisive for the original input VAT deduction. If, within the scope of an action, several goods are absorbed into an asset or several services are provided with respect to an asset, these are to be combined into a single correction object. A change in the circumstances shall also be assumed where the asset is removed from the business for purposes not associated with the business, without there being a requirement to tax this as a supply of goods and services without consideration according to § 3 paragraph 1b.

(4) Paragraphs 1 and 2 are to be applied accordingly to supply of services that do not fall within the scope of paragraph 3 sentence 1. The adjustment is limited to those services for which there would be a requirement to capitalise in the tax balance sheet. However, this shall not apply if supply of services are concerned, for which the recipient has already been able to deduct input VAT for a period prior to the rendering of the service. It is irrelevant whether the taxable person is obligated to actually maintain an accounting in accordance with §§ 140, 141 of the Fiscal Code.

(5) With respect to the adjustment according to paragraph 1, one fifth of the input VAT attributable to the asset in cases referred to in sentence 1 and one tenth in cases referred to in sentence 2, shall be assumed for each calendar year that is affected by the change. A shorter period of use shall be considered accordingly. The period of use is not reduced due to the fact that the asset is integrated into another asset.

(6) Paragraphs 1 to 5 shall apply accordingly with regard to input VAT deductions based on subsequent acquisition and production costs.

(6a) A change in circumstances is also given where there is a change in use within the meaning of § 15 paragraph 1b.

(7) A change in circumstances within the meaning of paragraphs 1 to 3 is also given in the case of a transition from the general taxation method to the non-levying of VAT in accordance with § 19 paragraph 1 and vice versa and in the case of a transition from the general taxation method to the average rate taxation method in accordance with §§ 23a or 24 and vice versa.

(8) A change in circumstances is also given where the still usable asset, which is used more than once for executing a transaction, is sold or supplied in accordance with § 3 paragraph 1b prior to the expiry of the adjustment period applicable according to paragraphs 1 and 5, and such transaction is to be assessed differently from the use which was decisive for the original input VAT deduction. This shall also apply to assets for which the input VAT deduction was partially excluded in accordance with § 15 paragraph 1b.

(9) The adjustment, in accordance with paragraph 8, is to be made as if in the period from the date of the sale or supply, within the meaning of § 3 paragraph 1b, up to the expiry of the applicable adjustment period that the asset would have continued being used for the business under the accordingly changed circumstances.

(10) The applicable adjustment period, as defined in paragraphs 1 and 5, is not interrupted in the case of a transfer of a going concern (§ 1 paragraph 1a). The seller is obligated to provide the customer with the information needed to make the required adjustment.

(11) The Federal Ministry of Finance, with the consent of the Federal Council, may issue a directive stipulating more precisely

1. how the adjustment under paragraphs 1 to 9 is to be made and in which cases it must be omitted for the purposes of simplifying the taxation procedures, preventing hardship or unjustifiable tax advantages;

2. for the purposes of preventing hardship or unjustifiable tax advantage on a sale or transfer of an asset without consideration,

   1. an adjustment of the input VAT deduction must also be made applying paragraphs 1 to 9 accordingly, even if there is no change in circumstances,

   2. the part of the input VAT amount, which when apportioned equably to the residual period referred to in paragraph 9, shall be owed by the taxable person,

   3. the taxable person may invoice the recipient the amount owed as VAT, according to paragraphs 1 to 9, and the recipient may deduct the amount as input VAT.