Credit Card Transactions –The German VAT Treatment

In this article, the author explains the treatment of credit card transactions for German VAT purposes. A credit card transaction involves different parties, and there is always a bank amongst them. As banks carry out mainly tax-exempt services, they are not allowed to deduct the input VAT charged to them by service providers. The author puts forward recommendations on how to increase the amount of deductible input VAT and lessen the cost burden related to these transactions.