Questions & Answers
Answers to common questions.
Curated from our articles on tax advisory, statutory audit and legal services — alphabetical, filtered by audience or topic.
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Which professions benefit most from a practice analysis?
Steuerberater (German Certified Tax Advisor), Rechtsanwälte (German Attorneys-at-Law) and Wirtschaftsprüfer (German Statutory Auditors) benefit in particular from a structured practice analysis. These regulated professions face high quality standards and can strengthen their competitiveness through a systematic review of processes and services.
As of: March 1997
Does the special protection against dismissal for severely disabled employees also apply after a transfer of business?
Yes, the special protection against dismissal under SGB IX transfers to the acquirer in the event of a transfer of business pursuant to § 613a BGB. The new employer assumes all rights and obligations of the employment relationship, including the special protection against dismissal for severely disabled employees.
As of: June 2009
Into which size categories are tax consulting firms grouped in the Focus Money ranking?
The Focus Money Top Tax Advisors ranking classifies firms by size, including a segment for large firms. This segmentation ensures comparable evaluation among similarly structured firms.
As of: April 2018
In which areas is commercial mediation particularly useful?
Commercial mediation is especially suitable for employment law disputes, for example between employer and employee, as well as for conflicts between business partners or shareholders. It is also an attractive alternative when long-term cooperation is to be preserved. However, for matters that mandatorily require court proceedings, litigation remains indispensable.
As of: January 2013
In which categories is the BAFF awarded?
The award is granted based on company size, in employee categories such as 20 to 80 employees. This allows companies of different sizes to be evaluated on a comparable basis.
As of: October 2013
In which segments are top Steuerberater recognized by Focus Money?
Focus Money differentiates its awards by firm size, including a segment for large firms. This ensures that firms are only benchmarked against comparable competitors. The results are published annually in a special edition.
As of: June 2020
Is a dismissal without the integration office's consent valid if the acquirer was unaware of the severe disability?
No. According to BAG case law, such a dismissal is invalid. What matters is the seller's knowledge at the time of hiring; this knowledge is attributed to the acquirer. A dismissal without prior consent of the integration office is therefore invalid, even if there are operational reasons.
As of: June 2009
Could the purchase price for the goodwill of a medical practice be amortized for tax purposes?
Yes, the purchase price for the goodwill of a medical practice could previously be amortized for tax purposes over its useful life. This reduced the buyer's taxable profit in subsequent years. The amortization was a key tax advantage when acquiring a practice.
As of: April 2007
Are pensioners required to file a tax return even without a request from the tax office?
Yes, pensioners are generally required to file a tax return if their taxable income exceeds the basic tax-free allowance (Grundfreibetrag). It is a common misconception that a return is only necessary upon explicit request by the tax office. The obligation arises independently from German tax law.
As of: November 2011
What criterion determines whether an employer benefit can be credited against the minimum wage?
The decisive factor is the purpose of the payment. If it compensates the regular, contractually owed work performance, it can be credited against the minimum wage. However, if it alters the balance between standard performance and wages to the employee's detriment — for example, by compensating additional hardships or overtime — crediting is excluded.
As of: June 2015
What criteria does Focus Money use to evaluate tax advisory firms in its Top Tax Advisor ranking?
Focus Money evaluates tax advisory firms based on several criteria: firm structure and organisation, staff training, and professional qualifications. The latter is assessed through detailed tax questions posed by tax auditors and the tax economists of Leibniz University Hannover.
As of: April 2018
Do allowances automatically double if a gift is made before inheritance?
No, the personal allowances for inheritance and gift tax do not automatically double through an advance gift. Using the allowances twice is only possible if more than 10 years lie between the gift and the subsequent inheritance. If the period is shorter, earlier gifts are aggregated with the inheritance.
As of: July 2008
When does it make sense to outsource ELENA payroll accounting to a Steuerberater?
With a larger number of employees, outsourcing to a Steuerberater (German Certified Tax Advisor) is worthwhile, as manual data entry is very time-consuming and error-prone. Since data was not stored in the form and had to be re-entered every month, the risk of errors grows with the size of the workforce. A professional service provider minimizes both the workload and the liability risk associated with faulty submissions.
As of: December 2010
When is professional advice on gifts and inheritances advisable?
Professional advice is advisable as early as the planning stage of asset transfers, well before the inheritance occurs. A Steuerberater (German Certified Tax Advisor) can optimally coordinate gifting strategies, the use of tax-free allowances, and the choice of tax class. Without professional guidance, you risk avoidable tax burdens that typically far exceed the cost of proper structuring.
As of: July 2008
When does a profit-realizing transfer of goodwill occur under BFH ruling X R 32/05?
In its ruling of 13 May 2009 (Az. X R 32/05), the BFH determined the conditions under which goodwill is transferred in a profit-realizing manner. This is particularly relevant when transferring a sole proprietorship to a GmbH, as the goodwill must be disclosed and taxed in the process. The precise delineation has significant income tax consequences for the transferor.
As of: June 2009
Why did ELENA initially mean additional work rather than relief for employers?
Following protests from data protection advocates, the use of the data by public authorities was postponed from 2012 to 2014. Employers, however, still had to transmit ELENA data on a monthly basis. This created duplicate work for several years: both paper certificates and electronic notifications had to be prepared.
As of: December 2010
Why is the goodwill amortization at risk when acquiring a medical practice?
Recent developments in case law are calling into question the previously customary tax amortization of the goodwill of a medical practice. It appears that the purchaser may, in future, no longer be able to deduct the portion of the purchase price attributable to the practice value for tax purposes, or only to a limited extent. This can significantly affect the economic viability of a practice acquisition.
As of: April 2007
Why is certified quality management relevant for tax advisory clients?
Certified quality management ensures standardized processes when handling tax matters, reducing errors and safeguarding deadlines. Clients benefit from transparent workflows, clear responsibilities, and continuous service improvement. External audits ensure ongoing compliance with these standards.
As of: August 2009
Why is a gift to a GmbH particularly disadvantageous from a tax perspective?
A GmbH receiving a gift is classified in tax class III and is granted only very limited allowances. The applicable tax rates range between 30 and 50 percent. This results in a significantly higher gift tax burden than a direct transfer to family members.
As of: June 2009
Why do tax advisory firms participate in professional and quality tests conducted by the press?
Such tests serve as a self-assessment of professional standards and enable an objective comparison with other firms. Since know-how and intellectual work are key production factors in tax consulting, it is important for firms to know where they stand in terms of quality.
As of: August 2009
Why have tax offices been increasingly active with pensioners since 2011?
Since 2011, the tax offices have systematically reconciled pension data with the reports submitted by pension insurance providers. This allows them to identify pensioners who have not filed a tax return despite being subject to tax. In many cases, requests for retroactive filing followed, sometimes covering several past years.
As of: November 2011
Why should succession planning be carried out early?
Timely structuring of asset succession allows tax-free allowances to be used multiple times and tax advantages to be leveraged in a targeted manner. Those who plan too late lose, in particular, the opportunity to exploit the 10-year period for the renewed use of allowances. Subsequent corrections are usually significantly more expensive than forward-looking advice.
As of: July 2008
Why should entrepreneurs transfer responsibilities to their successors at an early stage?
Delegating responsibilities early is part of responsible business leadership and helps the successor grow into their role. It also shows appreciation for the successor and prevents the transition from becoming abrupt or conflict-ridden. The departing entrepreneur can gradually step back from a patriarchal position, thereby safeguarding the company's stability.
As of: April 2015
Why did the Federal Constitutional Court overturn the rules on the home office?
In its decision of 6 July 2010 (Az. 2 BvL 13/09), the Federal Constitutional Court ruled that the restrictions on home office deductions in place since 2007 were unconstitutional. The rules violated the principle of equal treatment because taxpayers who had no other workplace available were denied the deduction of their expenses. As a result, the legislature was required to enact a constitutionally compliant revision with retroactive effect.
As of: July 2010
What does the Top-Steuerberater award by Focus Money mean?
The Top-Steuerberater award by Focus Money is based on a test that includes demanding technical questions, among other criteria. It therefore reflects a proven high level of expertise at the awarded firms and is granted in the form of a seal.
As of: August 2009
What does DIN EN ISO 9001 certification mean for a tax firm?
DIN EN ISO 9001 is an internationally recognized standard for quality management systems. For tax firms, it confirms that tax services and firm management meet standardized quality requirements. It is an industry standard among mid-sized and large firms.
As of: January 2011
What does a provisional notice regarding the home office mean?
If the tax assessment contains a provisional notice (§ 165 AO) concerning the home office, the assessment will be automatically amended in the taxpayer's favor following a constitutional ruling. A separate application is not required, as the tax office implements the adjustment ex officio.
As of: July 2010
What does ISO 9001 certification mean for a tax consultancy?
Certification under DIN EN ISO 9001 ff confirms that the firm has established a documented quality management system for its tax services and firm management. It covers standardized processes, defined responsibilities, and regular reviews by external auditors. For clients, this means transparent workflows and reliable service quality.
As of: August 2009
What changed for pensioners as a result of the Alterseinkünftegesetz (Retirement Income Act) of 2005?
The Alterseinkünftegesetz introduced deferred taxation of pensions in 2005. Since then, pensions have gradually become subject to higher taxation, while contributions to retirement provision are increasingly tax-deductible during the savings phase. As a result, many pensioners who previously did not have to file a tax return have become liable to pay tax.
As of: November 2011
What was ELENA (electronic income statement)?
ELENA was a procedure under which employers were required to transmit their employees' wage data monthly to a central data storage office in Würzburg. Authorities were to retrieve this data directly when processing applications for housing benefits, unemployment benefits, or parental allowance, eliminating the need for paper certificates. The aim was to reduce the bureaucratic burden on companies.
As of: December 2010
What is commercial mediation?
Commercial mediation is a structured out-of-court procedure for resolving business conflicts. A neutral mediator supports the parties in developing a fact-based solution that is acceptable to all involved. The goal is a mutually agreed settlement rather than a court ruling.
As of: January 2013
What should be considered when setting up an internal corporate reporting system?
Reporting must be tailored to the specific company and avoid creating a flood of information. Only data and information that are genuinely relevant to the business should be shared. Equally important is ensuring that this information reaches the right recipient at the right time.
As of: April 2005
What is the objective of a practice analysis in quality management?
A practice analysis serves to systematically capture and evaluate the success factors and process quality of a Steuerberater (German Certified Tax Advisor), Rechtsanwalt (German Attorney-at-Law), or Wirtschaftsprüfer (German Statutory Auditor) firm. The aim is to identify weaknesses and derive measures for improving quality. The central focus is on safeguarding the quality standards expected by clients.
As of: March 1997
What is the central goal of a successful business succession?
The goal is to align the business with the family while taking into account all personal, economic, and legal aspects. A successful succession addresses both entrepreneurial continuity and family relationships. This is the only way to avoid typical mistakes — the so-called deadly sins of succession.
As of: April 2015
What is the goodwill of a medical practice?
Goodwill (also referred to as practice value) is the intangible value of a medical practice that exceeds the tangible assets such as furnishings and equipment. It primarily comprises the patient base, the practice's reputation, its location, and established structures. When a practice is acquired, goodwill is typically stated separately within the purchase price.
As of: April 2007
What is the BAFF award?
BAFF stands for 'Bocholter Auszeichnung für FamilienFreundlichkeit' (Bocholt Award for Family Friendliness) and is presented by Bündnis für Familie in Bocholt e.V. Companies are recognized for overall family friendliness as well as for individual measures and projects that are particularly family-friendly. The award is granted in different size categories based on the number of employees.
As of: October 2013
What is the Focus-Money Top Tax Advisor award?
Focus Money annually recognizes tax advisory firms in various size categories as Top Tax Advisors. The award is regarded as an external seal of quality and complements formal certifications such as ISO 9001 or the quality certification of the DStV.
As of: January 2011
What happens to tax assessments that have been challenged by an appeal?
If the tax assessment was kept open by an appeal, it has not yet become final and binding. Following the Constitutional Court's decision, the tax office amends the assessment in favor of the taxpayer, allowing the home office expenses to be subsequently taken into account.
As of: July 2010
What should taxpayers do if their assessment is final?
If the tax assessment is final and contains neither a reservation of review (Vorbehalt der Nachprüfung) nor a provisional notice (Vorläufigkeitsvermerk), and no appeal was filed, a subsequent recognition of home office costs is generally no longer possible. It is therefore advisable to keep future assessments open on disputed legal questions by filing a timely appeal.
As of: July 2010
What was the particular focus of the Top Steuerberater test 2020?
The 2020 test was conducted under the theme 'The Best Crisis Managers' and was published in issue 25/2020 on 9 June 2020. The background was the heightened advisory demand during the Corona crisis, when clients increasingly required short-term tax and business management support.
As of: June 2020
What is the 10-year period for gift tax purposes?
Within a 10-year period, multiple gifts between the same persons are aggregated for the calculation of gift and inheritance tax. The personal tax-free allowance is available only once per 10-year period. Only after this period has expired does the allowance reset and become available for a second time.
As of: July 2008
What are the requirements of the Focus-Money test for top tax advisors?
The test is not trivial and contains a wide range of tricky technical questions on tax law. Only firms that pass this examination receive the seal as a top Steuerberater (German Certified Tax Advisor).
As of: August 2009
What is the significance of Basel II ratings for medium-sized enterprises?
Basel II requires banks to link lending decisions to the borrower's creditworthiness, which is assessed through a rating. For medium-sized enterprises, this means that loan terms and, in some cases, credit availability depend directly on the rating classification. Systematic reporting and open communication with the bank are therefore key levers.
As of: April 2005
What is the significance of the Focus Money Top Tax Advisor award?
Each year, Focus Money recognises tax consultancies as Top Tax Advisors based on defined quality criteria. The award serves as guidance for clients when selecting a qualified advisor. It evaluates, among other things, service quality, firm organisation, and professional expertise.
As of: August 2009
Which data did employers have to report under the ELENA procedure?
Employers were required to submit monthly earnings data for their employees, including details on salary and the amount of social security contributions. The data was transmitted electronically to a central storage authority. In parallel, paper forms still had to be completed as long as the authorities were not yet permitted to retrieve the data.
As of: December 2010
What consequences do retirees face if they have missed filing their tax return?
Retirees who failed to file despite being subject to tax liability must expect back assessments covering several years. In addition, late-filing surcharges and interest may apply. In severe cases, criminal tax proceedings for tax evasion can also be initiated.
As of: November 2011
What risks arise from incorrect ELENA reports submitted by the employer?
If the employer submits incorrect information, employees may receive sickness or unemployment benefits in the wrong amount. Typing errors are particularly likely with manual online data entry, as the data is not stored in the form but must be re-entered each month. In addition, the question of liability for incorrect submissions had not been conclusively resolved.
As of: December 2010
What role do clients play in a firm's quality management?
Clients are at the center of all services provided by a firm. The firm analysis and its implementation primarily serve to ensure clients' quality expectations are met on a lasting basis. Quality management is therefore not an end in itself, but a tool for consistent client orientation.
As of: March 1997
What role does appreciation play in the succession process?
Appreciation is a decisive factor in building the successor's motivation and commitment to the company. Transferring responsibilities and decision-making authority signals trust in the successor. Without this appreciation, there is a heightened risk that the designated successor will withdraw or fail to manage the transition successfully.
As of: April 2015
What role does communication with the bank play in the rating process?
Open, regular, and high-quality communication with the bank strengthens the relationship of trust and has a positive impact on the rating. Banks assess not only figures but also the quality, timeliness, and reliability of the information provided. Those who communicate actively and in a structured manner reduce uncertainties in the credit assessment.
As of: April 2005