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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Does the withdrawal of real estate from business assets qualify as an acquisition within the meaning of § 23 EStG?
Yes. Under § 23 Abs. 1 S. 2 EStG, the transfer of an asset from business assets to private assets is treated as an acquisition. If the property is sold within 10 years of the withdrawal, this constitutes a taxable private sale transaction. The date of withdrawal is decisive for the start of the 10-year period.
As of: July 2022
Does providing a dwelling to one's own children qualify as use for personal residential purposes under § 23 EStG?
Yes, the rent-free provision of a dwelling to one's own children is generally recognized as use for personal residential purposes within the meaning of § 23 Abs. 1 Nr. 1 Satz 3 EStG. However, this requires that the children qualify for income tax consideration under § 32 EStG, since the taxpayer is thereby fulfilling their maintenance obligation. Only under this condition can a capital gain from the sale remain tax-free.
As of: October 2023
Does the three-month child benefit waiting period also apply to EU nationals who have recently moved to Germany?
According to the ruling of the FG Münster dated 10 December 2020, the three-month waiting period for non-employed EU nationals does not apply if an entitlement to child benefit in Germany already existed before the establishment of domestic residence. In such cases, the Familienkasse may not refuse child benefit for the first three months. An appeal to the BFH was admitted due to the fundamental significance of the matter.
As of: February 2021
Does the increased flat rate apply from the first kilometre of the commute?
No, the increase only applies from the 21st distance kilometre onwards. For the first 20 kilometres of the one-way distance between home and primary place of work, the rate remains at EUR 0.30 per kilometre.
As of: March 2020
Does letting a property to one's own child qualify as personal use within the meaning of § 23 EStG?
Providing a property rent-free to a dependent child can qualify as indirect use for personal residential purposes and trigger the tax exemption. This requires that the property is used exclusively by the child. If another person, such as a divorced spouse, also lives there, the exemption does not apply, as this person is considered an unrelated third party.
As of: August 2023
Does a taxi qualify as public transport within the meaning of § 9 Abs. 2 S. 2 EStG?
No. In its ruling of 9 June 2022 (VI R 26/20), the BFH held that a taxi does not constitute public transport within the meaning of § 9 Abs. 2 S. 2 EStG. When privileging public transport, the legislator had scheduled-line services in mind, not licence-required occasional transport by taxi.
As of: December 2022
Does an educational institution qualify as a first place of work even for short full-time courses?
Yes. According to the BFH ruling of 14 May 2020, the duration of a full-time educational program is irrelevant for classification as a first place of work. § 9 Abs. 4 Satz 8 EStG does not require a minimum duration. It is sufficient that the educational institution is attended continuously, and not merely occasionally, during the fixed-term program.
As of: October 2020
Does the one-year or ten-year speculation period apply to co-rented furniture?
For furniture and furnishings used to generate income (e.g., through rental), the speculation period is extended from one to ten years. According to the FG Münster, this applies even if the items were rented out in at least one calendar year. In practice, however, this extension is only relevant if the items are not everyday objects.
As of: January 2021
Does the reduced tax rate apply to overtime compensation paid out in a lump sum?
Yes. In its ruling of 2 December 2021 (VI R 23/19), the BFH held that overtime compensation paid retroactively in a lump sum within a single assessment period qualifies as extraordinary income under § 34 Abs. 1 EStG and is therefore taxed at the reduced rate (one-fifth rule). This mitigates the additional tax burden resulting from the progressive tariff.
As of: March 2022
Does the rule on acquisition-related production costs apply upon withdrawal from business assets?
No. If the same taxpayer transfers a property from business assets to private assets, this does not constitute an acquisition. Subsequent renovation costs therefore do not need to be capitalized under § 6 Abs. 1 Nr. 1a EStG, but can be claimed as immediately deductible income-related expenses.
As of: June 2023
Into which categories are tenant fit-outs classified for tax purposes?
Tenant fit-outs are divided into four categories: temporary components (Scheinbestandteile), operating fixtures (Betriebsvorrichtungen), other fit-outs under the tenant's economic ownership, and other fit-outs with a specific business or professional use advantage. The classification determines whether the asset is movable or immovable and how depreciation is applied.
As of: July 2023
In which German federal states are late-filing penalties for the property tax return largely excluded?
In the federal states applying the federal model – Thuringia, Berlin, Brandenburg, Bremen, Mecklenburg-Western Pomerania, North Rhine-Westphalia, Rhineland-Palatinate, Saxony-Anhalt and Schleswig-Holstein – the automatic assessment of a late-filing penalty under § 152 Abs. 2 AO is excluded pursuant to Art. 97 § 8 Abs. 5 EGAO. In these states, late-filing penalties are imposed only in justified individual cases.
As of: February 2023
In which cases is a profit forecast for a holiday rental not required?
According to the tax authorities, a profit forecast is not required if one of the following is credibly demonstrated: the rental is transferred to an agent with a contractual exclusion of personal use; the apartment is located in an otherwise owner-occupied two- or multi-family house or in immediate proximity; several holiday rentals exist at the same location with only one used personally; or the rental period does not fall short of the locally customary period by more than 25%.
As of: January 2021
During which periods is the special depreciation under § 7b EStG eligible for funding?
Eligible are residential units for which the building application or building notification was submitted after 31/08/2018 and before 01/01/2022, as well as after 31/12/2022 and before 01/01/2027. For 2022, there is a funding gap, as the legislator intended to incentivize only future construction projects. The decisive date is generally the date stamp of receipt at the responsible building authority.
As of: March 2023
To what extent is school tuition deductible as a special expense?
Parents may deduct 30% of the fees paid for their child's attendance at a school under independent sponsorship or a predominantly privately financed school as special expenses (§ 10 Abs. 1 Nr. 9 EStG). Fees for accommodation, supervision, and meals are excluded. A further requirement is that the school is recognized by the competent state ministry for the issuance of certificates.
As of: February 2024
To what extent can tradesman services be claimed for tax purposes under § 35a Abs. 3 EStG?
Taxpayers may deduct 20% of the eligible expenses, up to a maximum of EUR 1,200 per calendar year, directly from their personal income tax liability. Eligible services include renovation, maintenance, and modernization work performed within the taxpayer's own household.
As of: December 2022
To what extent are childcare costs deductible as special expenses?
Under § 10 Abs. 1 Nr. 5 EStG, two-thirds of the expenses for the care of a child belonging to the household within the meaning of § 32 Abs. 1 EStG can be claimed as special expenses (Sonderausgaben). The deduction is capped at a maximum of EUR 4,000 per child per year.
As of: May 2022
Is driving school instruction exempt from VAT?
The Berlin-Brandenburg Tax Court (Az. 5 V 5144/15) ruled that driving school instruction – including classes A and B – can generally be VAT-exempt. However, a final decision by the BFH is still pending, so the legal situation is currently uncertain.
As of: March 2016
Is the deduction ban on first-degree training costs constitutional?
Yes. In its ruling of 10 January 2020, the Federal Constitutional Court held that the provision is compatible with the German Basic Law. While there is unequal treatment compared to second-stage training, this is justified by objective reasons.
As of: February 2020
Is payment for company advertising on an employee's private vehicle considered taxable wages?
According to the ruling of the FG Münster dated 03.12.2019 (Az. 1 K 3320/18 L), payments made by an employer for affixing license plate frames with company advertising to an employee's private vehicle constitute taxable wages subject to wage tax. The court held that the triggering factor for the payment is the employment relationship and thus the work activity, not an independent advertising interest.
As of: February 2020
Is the ruling by the FG Brandenburg final?
No, the FG Brandenburg has allowed an appeal. A final decision by the BFH is therefore still pending. Employers should nevertheless handle such arrangements cautiously and carefully review any multiple employment relationships with the same individual.
As of: February 2023
Is the ruling of the Münster Tax Court on vehicle advertising already final?
No, the Münster Tax Court has allowed an appeal to the Federal Fiscal Court (BFH). Until a supreme court decision is issued, employers should place particular emphasis on a clear, advertising-oriented contractual structure for comparable advertising agreements with employees in order to minimise the risk of reclassification as wages.
As of: February 2020
Is the ruling on renovation costs for leased businesses final?
No, the ruling by the FG Rheinland-Pfalz is not final. The tax office has filed an appeal with the BFH. A final decision by the highest court is still pending, so the legal situation in comparable cases remains uncertain.
As of: February 2022
Is the civil servant death benefit subject to income tax?
Yes, according to the BFH ruling (Az. VI R 8/19), the civil servant death benefit qualifies as taxable income from employment under § 19 EStG. The payout is therefore reduced by income tax and the solidarity surcharge.
As of: September 2021
Is the profit from selling the furniture of a rented holiday apartment taxable?
No, the portion of the profit attributable to the furniture is not subject to speculative taxation. Furniture and furnishings are considered assets for everyday use, which typically lose value and have no potential for appreciation. Under § 23 EStG, such items are expressly exempt from taxation on private sales transactions, even if they were used for rental purposes.
As of: January 2021
Is the sale of a co-ownership share to the ex-partner taxable?
Yes. If less than 10 years lie between acquisition and disposal, the gain is taxable as a private disposal transaction under § 23 Abs. 1 S. 1 Nr. 1 EStG. The BFH confirmed this for a divorce case in its ruling of 14.02.2023 (IX R 11/21). A tax exemption only applies if the requirements for use for own residential purposes are met.
As of: August 2023
Is the capital gains allowance also available if the business was previously leased?
Yes, according to BFH case law (ruling of 13 March 1986, IV R 176/84), the allowance is available to the taxpayer even if the business was first leased and only sold after expiry of the lease agreement. The prerequisite is that the lease was entered into for health reasons and that the sale takes place after the continued occupational disability has been established with certainty.
As of: November 2022
Can the 60-square-metre threshold be applied to foreign secondary residences in cases of dual household maintenance?
No. The BFH has ruled that the 60-square-metre standard, recognised on social-law grounds, applies only to domestic residences. For foreign residences, country-specific conditions must be taken into account, since German authorities cannot reliably determine average rents based on foreign standards.
As of: November 2023
Is registration in the Transparency Register subject to a fee?
No, entries in the Transparency Register are free of charge. Emails demanding a paid registration do not originate from the official authority and should be regarded as fraud attempts.
As of: January 2020
Is the distance-learning university the primary place of work in a part-time distance-learning programme?
According to the Lower Saxony Tax Court (Niedersächsisches FG), a distance-learning university does not qualify as the primary place of work in a pure part-time distance-learning programme. The court reasoned that full-time studies require a workload of roughly 40 hours per week, whereas part-time studies only involve about 20 hours per week. Travel expenses are therefore not limited to the standard commuting allowance (Entfernungspauschale).
As of: June 2022
Has the question of the relevant cut-off date for purchase price allocations been clarified by the highest courts?
No, the legal question has not yet been conclusively clarified. The Münster Tax Court expressly allowed an appeal due to differing views on the relevant cut-off date. Taxpayers should therefore keep corresponding assessment notices open where appropriate.
As of: January 2023
Is the five-year period under § 35b EStG constitutional, even if it results in double taxation?
Yes, the BFH considers the rigid five-year period to be constitutionally permissible. It is accepted that a double burden of inheritance tax and income tax cannot be avoided in every individual case.
As of: May 2024
Does sharing a household with an adult disqualify you from the relief amount?
As a rule, living together with another adult excludes the relief amount (§ 24b Abs. 3 S. 1 EStG). An exception applies if the other person is your own biological, adopted, foster, step, or grandchild for whom child benefit or a child allowance is granted. According to the Ministry of Finance of Schleswig-Holstein, hosting an adult refugee in the household is also not detrimental.
As of: February 2023
Has the legal question of distance learning as a primary place of activity been definitively resolved?
No, a final resolution is still pending. An appeal against the ruling of the Lower Saxony Tax Court is currently before the BFH, and its decision remains to be seen. Affected taxpayers should keep relevant tax assessments open where appropriate.
As of: June 2022
Is the extended trade tax deduction available in a reverse business split (umgekehrte Betriebsaufspaltung)?
Yes. The BFH has ruled that real estate companies may apply for the extended trade tax deduction under § 9 No. 1 Sentence 2 GewStG even in cases of a reverse business split. A genuine commercial activity cannot be inferred from this structure, so the deduction is not precluded.
As of: June 2024
Is the planned income tax exemption for photovoltaic systems an election?
According to the current view in the literature, the tax exemption is to be mandatory and therefore does not constitute an election. If the relevant capacity thresholds are not exceeded, no profit needs to be determined.
As of: October 2022
Is the private use of a company smartphone exempt from wage tax?
Yes, under § 3 No. 45 EStG, the private use of a company mobile phone provided by the employer, including the connection and basic fees covered by the employer, is tax-free. The exemption applies regardless of the extent of private use. The prerequisite is that the device is owned by the employer as company property.
As of: February 2023
Is an appraisal under ImmoWertV permissible for determining the remaining useful life?
According to BFH case law, the building cost valuation method under the Real Estate Valuation Ordinance (ImmoWertV) is not explicitly intended for determining the actual remaining useful life. However, it may serve as a suitable basis for estimation in individual cases and can be recognized by the tax court.
As of: March 2023
Can donations for disaster relief be deducted without a formal donation receipt?
Yes, in the event of a disaster, a simplified payment record such as a bank statement or cash deposit slip is sufficient for claiming the donation deduction. A formal donation receipt (Zuwendungsbestätigung) is not required. However, this relief applies only for a limited period – in the case of the July 2021 flood, for donations made up to 31 October 2021.
As of: October 2021
Is input VAT deduction possible from the per diem meal allowance?
No, the per diem meal allowance itself does not allow input VAT deduction (BFH ruling of 7 July 2005, V R 4/03). However, businesses entitled to input VAT deduction may claim the VAT from actual meal invoices, even if the costs are not deductible as business expenses for income tax purposes (Section 15.6 (1) UStAE).
As of: July 2022
Is a home office considered business assets in the case of self-employed activity?
When used for self-employed or commercial purposes, a home office generally must be capitalized as required business assets, provided the value thresholds of § 8 EStDV are exceeded. This has consequences for the later disclosure of hidden reserves, particularly upon cessation of the activity or sale of the property.
As of: September 2023
Is flat-rate wage tax of 2% under Section 40a (2) EStG permissible in this scenario?
No. The 2% flat rate requires that marginal employment exists within the meaning of social security law. Since a single, unified employment relationship with the same employer is not recognized as marginal employment, flat-rate taxation is likewise excluded. The remuneration must be taxed as unified wages under Section 19 EStG.
As of: February 2023
Is an early repayment penalty deductible as income-related expenses when selling a rented property?
No. According to the ruling of the Cologne Tax Court dated 19 October 2023 (11 K 1802/22), an early repayment penalty incurred upon the sale of a rental property is not deductible as ongoing income-related expenses under income from letting and leasing. Economically, the payment is no longer attributable to the ongoing rental activity but rather to the disposal. The required causal link with rental income is therefore missing.
As of: February 2024
Can a Christmas bonus or a contractually agreed special payment be converted into an inflation compensation bonus?
A conversion of Christmas bonuses or special payments based on contractual agreements or legal obligations into an inflation compensation bonus (IAP) is not possible, as the required link to inflation is missing. Only voluntary special payments without a contractual or legal basis – such as gratuities – can be converted into a tax-free IAP. The payment must be shown on the payslip as „Inflationsausgleichsprämie“.
As of: January 2023
Can the inflation compensation bonus be paid in installments or as a benefit in kind?
Yes, staggered payment – for example on a monthly basis – is permissible under tax law, provided the total amount of EUR 3,000 is not exceeded. Pursuant to § 3 No. 11 c) EStG, both cash and in-kind benefits are permitted.
As of: January 2023
Can repaying other rental property loans with the sale proceeds qualify as anticipated income-related expenses?
In principle, redirecting the remaining sale proceeds to repay other rental property loans may be possible, but it requires demonstrable intent and actual prompt use of the funds. In the case at hand, the Tax Court of Cologne denied the deduction because there was no concrete evidence and no immediate intent to repay. Taxpayers should therefore allocate the funds promptly and document the process.
As of: February 2024
Can a pensioner deduct home office costs multiple times when pursuing several self-employed activities?
No. The annual flat rate of EUR 1,260 or the full deduction of actual costs is person-related and can only be claimed once in total. If several self-employed or commercial activities are carried out in the same home office, the costs or the flat rate must be allocated to the respective activities according to their share of use.
As of: September 2023
Can a rental property be depreciated over a shorter period than the AfA table provides?
Yes. Under § 7 Abs. 4 Satz 2 EStG, a landlord may apply a shorter actual useful life than the standard 40 or 50 years. The prerequisite is that the shorter useful life is conclusively substantiated, typically by an expert appraisal from an independent surveyor.
As of: March 2023
Can a home office be deducted for tax purposes on health grounds?
Yes. The Fiscal Court of Berlin-Brandenburg (judgment of 29 September 2022, 5 K 5138/21) ruled that employees may deduct the costs of a home office as income-related expenses if its use is required for health reasons. This applies even where the employer generally provides a workplace. In the case decided, the deduction was capped at the maximum amount of EUR 1,250 per year.
As of: January 2023
Can a tax reduction under § 35a EStG be claimed when offset via the shareholder clearing account?
No. The BFH ruled in its decision of 09 June 2022 (VI R 23/20) that offsetting a GmbH's craftsman invoice via the shareholder clearing account does not meet the requirements of § 35a Abs. 5 sentence 3 EStG. The shareholder clearing account is not an account of the service provider (the GmbH), but an account of the shareholder held with the GmbH.
As of: December 2022