Calculating the deductible proportion of VAT for mixed-use buildings based on the ratio between the area of the premises allowing for VAT deduction and that of the premises not allowing for VAT deduction is compatible with EU law. This is the main thrust of a decision by the German Federal Tax Court. What is more interesting, however, are the further comments regarding input VAT deduction. The Federal Tax Court interprets the rule regarding the determination of the proportion of input VAT deduction in such a way that the allocation of input VAT according to economic criteria will only apply to those VAT amounts that are subject to adjustment of input VAT deduction as referred to in Art. 184 – 192 Directive 2006/112/EC.