News about the input VAT key for mixed properties – the sales key on the fast track?

Lawyer Dr. Elisabeth Märker, Senior Associate at POELLATH, Berlin

On 20 October 2022, the BMF published a new letter on the division of the input VAT code for mixed properties. This particularly concerns the delimitation of the areas of application for area and turnover keys. BMF also comments on the treatment of underground parking lots and solar installations.

introductory example

Suppose the stairwell in a rented residential and commercial building gets a new coat of paint. To what extent can the owner of the object request a (proportionate) refund of the VAT paid to the painter in the form of input VAT deductions?

If input services are purchased for a mixed property, as in the example above, the entrepreneur must divide the input VAT into a deductible and a non-deductible part. However, there is an exception to this if the input services can be assigned directly to individual usage units. This is, for example, the case if, instead of the rise from the example above, a business unit subject to VAT is painted at the lessor’s expense and expense. A direct distribution of the incoming tax does not take place with regard to the acquisition or production costs of the property. The property is treated for VAT purposes as a whole.

The part of the input VAT that belongs to the input VAT chargeable sale is not deductible. But what part of the input tax from the painting of the entrance belongs to the sales that, for example, result from the input tax-bearing apartment rental? According to § 15, subsection 4, UStG, this transfer must take place as part of a “correct estimate”. According to the legislation, a distribution in relation to the ratio between the sales from the various uses is only subsidiary. On 20 October 2022, a new BMF decree on the calculation of the input tax key for mixed properties was published, which deals with the process of the aforementioned “correct estimate”. One of the main topics is the relationship between sales and area key for determining the non-deductible input VAT.

Scope of the revenue key

In principle, the input VAT allocation is only subsidiary according to the entrepreneur’s sales key. According to the new BMF letter of 20 October 2022, the property’s area key must continue to be prioritized, as this continuously represents the more precise distribution method in relation to the total revenue key. As a result, the input tax on the staircase painting can be determined according to the ratio between the taxable rented areas and the used areas (e.g. apartments), for which there is a deduction for input VAT. The chosen distribution method does not have to be the most accurate, but only one be an appropriate method. The burden of proof for a more precise distribution according to the turnover key lies with the tax authorities.

However, according to the new BMF decree, the use of a property-related turnover key must be in accordance with the BFH’s previous case law (judgment of 7 May 2014 – VR 1/10, BFH/NV 2014 p. 1177 of 3 July 2014 – VR 2/10, BFH/NV 2014 p. 1699) itself is excluded (see below for solar systems). An application should (only) be required if the layout (thickness of ceilings/walls, interior design) of the rooms used for different purposes differs significantly from each other. In the example above, the ratio of sales between areas used for pre-tax deductions and those used without pre-tax would only be relevant if the facilities in the two groups of areas differed significantly. This may, for example, be the case if the landlord has furnished the business premises simply and with simple building materials, whereas the apartments are luxuriously furnished.

The calculation of the area key

According to the new BMF decree, all floor areas (e.g. including basement, parking garage, storage room) must be used to calculate the area using the area key. Instead of using the floor area, however, another method for calculating the area (e.g. according to DIN 277 or the residential area regulation) should be allowed if it is used uniformly for the entire building. It must be ensured that the same calculation method is actually used for all rental space in a property.

The parking garage must be included in the area key

According to point 16 of the BMF letter, the floor areas of all rooms must be used for the area calculation in the area key, regardless of whether they are residential or business areas. The addition in brackets expressly mentions the underground car park as the area to be included in the calculation. Outdoor parking spaces, on the other hand, must not be included according to BFH’s jurisprudence, as they are not part of the building.


The new BMF letter summarizes the distinction that BFH makes between area and revenue keys. A prioritization of the sales key could result, for example, in relation to the calculations on the use of roof areas for solar systems. In the opinion of the tax authorities, the roof areas should be included here as part of the sales key. In a second step, the area key for the building’s leased areas must then be used.

A positive aspect is that different methods of calculating the area are allowed in the area key, provided they are used consistently. This creates flexibility and application security. The clarification of the treatment of parking basement areas is also to be welcomed, although this has been in practice for years.

It remains to be seen how the tax authorities apply the principles in the new BMF letter in practice. Particularly interesting is the threshold at which different equipment is used by the tax authorities on the condition that there is a significant deviation and that the sales key will take precedence. The principles in the new BMF decree must be applied in all open cases. Protection of legitimate expectations was only covered by certain groups of cases.

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