A Ferrari is deemed inappropriate for a dentist’s patient acquisition activities.

The Baden-Württemberg Finance Court reached a similar decision in the case of a dentist who wished to use a Ferrari for patient acquisition. In this case, the tax office reduced the input VAT deduction to an estimated ‘reasonable’ proportion on the grounds that the business entertainment expenses were unreasonably high.

The case was brought by a limited company which primarily provided dental laboratory services subject to the reduced VAT rate. Its shareholders were the parents of the managing director, who ran a dental practice with his wife. The laboratory worked almost exclusively for the managing director’s (and son’s) dental practice.

The son had a passion for motor racing. The significance of the entertainment expenses for the laboratory’s commercial success was deemed to be minimal, as it was essentially commissioned by the managing director’s (and son’s) dental practice, and the Ferrari was used primarily for journeys to the tax adviser, to the banks and to professional development events.

(Judgment of 06.0.2016, Ref. 1 K 3386/15)

Our tip: So better to go with the Porsche than the Ferrari – and, above all, to get it right – we’d be happy to advise you.

Rudolf Stettmer

Tax Consultant
Partner