You are thinking of a different deductiblity. When investing into the company you can deduct cost from taxes on profit, assuming there is profit to deduct it fr

You are thinking of a different deductiblity. When investing into the company you can deduct cost from taxes on profit, assuming there is profit to deduct it from. VAT however is still removed regardless if there is profit, which apply both to inventory and to other assets like buildings, equipment, cars and so on. The deduction on taxes on profit is thus done after vat has already been removed. The assumption is not that you can one day sell it and pay vat on it. If a company buys a car, there is no assumption that they will sell the same car for profit at a later time. The assumption is that the car exist for the company in order to generate profit over time as part of the business operations, which is the reason why you don't need to pay VAT when purchasing it. As a side note, there exist plenty of companies with zero or close to zero revenue, but with plenty of expenditures for which they get to remove VAT on. Those could be fake companies that are created for this specific purpose, or companies that are in theory investing into becoming profitable. A common example is a person investing into a expensive hobby, say photography, who could in theory turn it professional but has a company in order to avoid paying vat on equipment. In order to make the tax office "happy" they maybe sell a couple of photos a year, but is no where profitable and will likely never be it. Different countries in EU may have different laws regarding VAT. The above is primarily about Swedish TAX system, but its very likely the same apply to Germany.