Tax & Law
Input VAT
Definition
Input VAT refers to the value added tax a business pays on purchases of goods and services, which it can deduct from its own VAT liability to the tax authority (input tax deduction). A prerequisite for the input tax deduction is a proper invoice (§ 14 UStG), which for electronic invoices means correct compliance with all mandatory fields under EN 16931.
Switch to German:Vorsteuer (DE)
Related terms
VAT (Value Added Tax)VAT (Value Added Tax), known in German as Umsatzsteuer (USt) or Mehrwertsteuer (MwSt), is a consumption tax on supplies of goods and services. In Germany the standard rate is 19% and the reduced rate is 7%. Electronic invoices under EN 16931 must state the VAT amount (BT-110), tax rate (BT-152), and taxable base amount (BT-116) for each tax breakdown.GoBD (Principles for the Proper Keeping and Storage of Books, Records and Documents in Electronic Form)The GoBD are administrative guidelines issued by the German Federal Ministry of Finance for audit-compliant archiving and retention of tax-relevant documents in electronic form. They set requirements for immutability, completeness, orderliness, traceability, and machine readability. Electronic invoices must be retained in compliance with GoBD requirements — i.e., in their original electronic format, not as printouts.EN 16931EN 16931 is the European standard that defines the semantic data model of a core invoice. It specifies the mandatory and optional fields (Business Terms), their meaning, and the validation rules that apply to all conforming electronic invoices in the EU. Nationally implemented standards such as XRechnung, ZUGFeRD (EN 16931 profile), and Factur-X must comply with this standard.Small Business Rule (§ 19 UStG)The small business rule under § 19 UStG exempts businesses with annual turnover below a threshold (since 2025: €25,000 in the previous year and an expected €100,000 in the current year) from charging VAT. Small businesses issue invoices without VAT but are also not entitled to deduct input tax. On electronic invoices, the VAT category code E (exempt) must be used.