The discussion regarding input VAT (value added tax) deduction for public sector bodies has evolved considerably due to the European Court of Justices (ECJ) rulings. Since the ECJ judgments “Lennartz”, “Armbrecht” and “Seeling” it has become common knowledge that goods acquired by a taxable person can be subject to full and immediate input VAT deduction, even if their use for economic purposes is very limited. At the time, the aforementioned set of rulings was understood to be equally applicable to public sector bodies. Conversely, in the judgments “Securenta” and “VNLTO”, the ECJ ruled that non-economic activities of taxpayers constitute an area excluded from input VAT deduction. In this respect, the ECJ stated that holding companies, non-profit associations and public sector bodies may carry out economic as well as non-economic activities, while the latter cannot be subject to input VAT deduction. This diploma thesis discusses the ECJs key decisions regarding input VAT deduction for public sector bodies. It shows that Community law has not been implemented into national law accordingly. On the one hand, there are significant differences regarding the entrepreneurial status of public sector bodies. On the other hand, it is doubtful that Austrian national tax law provides a sufficient legal basis for the exclusion of input VAT deduction for non-economic activities. The knowledge of these differences between Austrian tax law and community law might offer considerable tax planning opportunities for well-advised public sector bodies.