Input tax
Input tax is the VAT a taxable business has paid on its purchase invoices; it may be deducted from its own tax liability to the extent the acquired supply is used for taxable purposes.
Definition
The deduction hinges on the invoice: it must name the supplier with its UID followed by the VAT designation, the recipient, the supply, the date, the consideration, and the tax rate or amount. If something essential is missing the deduction is at risk — not out of formalism but because it then cannot be checked whether any tax was remitted at all.
Where a supply is used for mixed purposes, the deduction has to be corrected. The same applies where excluded turnover is generated: there is no right to deduct, and the input tax share has to be apportioned by a key.
Where to read it
What the software must be able to do
Check whether input tax codes can be set per account and per document, whether input tax corrections and reductions can be represented, and whether document linking lets an audit find the invoice from the entry.
Checked Aug 2026
More terms under VAT and customs: Acquisition tax Customs declaration Effective method Exempt supplies Flat-rate VAT method Margin taxation Non-consideration Own use Place-of-recipient rule Reduction of consideration Takeaway 2.6 vs. eat-in 8.1 Value added tax VAT 3.8 % accommodation VAT 8.1 / 2.6 / 3.8 % VAT liability