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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656 questions · Page 3 / 14
Can a childminder choose between actual business expenses and a lump-sum deduction?
Yes, for income from self-employment there is a right to choose between deducting the actual operating costs and applying a lump-sum business expense allowance. However, the lump sum may only be applied if the care takes place in the childminder's own household. If the care is provided on third-party premises, only the actual costs are deductible.
As of: July 2021
Can a forced auction be tax-free?
Yes, a forced auction can be tax-free if more than ten years have passed between the acquisition of the property and the submission of the highest bid. In this case, the speculation period under § 23 Abs. 1 Nr. 1 EStG has expired and any capital gain is not subject to income tax.
As of: May 2022
Can an opting company revert to partnership taxation?
Yes, the KöMoG does not stipulate a minimum holding period. By filing a reversion application, the company can return to the original transparent taxation regime. The application must likewise be submitted to the tax office at least one month before the start of the fiscal year.
As of: July 2021
Can declining-balance depreciation be used for assets acquired in 2022?
Yes, declining-balance depreciation under § 7 Abs. 2 S. 1 EStG has been extended to movable fixed assets acquired or produced during the 2022 calendar year. It may be chosen as an alternative to straight-line depreciation and is capped at 2.5 times the straight-line rate, but no more than 25%.
As of: June 2022
Can Kindergeld continue to be received for a child with a long-term illness?
Yes, but on a different legal basis. Instead of § 32 Abs. 4 S. 1 Nr. 2 a EStG, eligibility may arise on grounds of disability under § 32 Abs. 4 S. 1 Nr. 3 EStG, provided the child is unable to support themselves as a result of the illness. The key requirement is the inability to self-support due to the illness.
As of: May 2022
Can research funds be declared as tax-free by entering them in a remarks field of the tax return?
Simply entering research funds in a remarks field of the income tax return does not result in tax exemption. The tax authorities examine the factual connection to the professional activity and subject the funds to taxation if they are professionally motivated. A tax exemption must be based on statutory law and is generally not available in the context of a habilitation.
As of: August 2022
Can actual expenses be claimed instead of the flat rate?
Yes, higher actual business expenses may be claimed instead of the flat rate, provided they are supported by receipts. Please note, however, that no input VAT deduction is available for business expenses claimed on a flat-rate basis.
As of: December 2023
Can childcare costs paid to grandparents be deducted for tax purposes?
Yes, provided the grandparents do not live in the same household as the child, payments and travel cost reimbursements are deductible. A written childcare agreement is required, setting out remuneration and care times on arm's length terms. Care arranged within the family, such as by relatives or partners living in the same household, is not recognised.
As of: May 2022
Can garden redesign costs be deducted as tradesperson services under § 35a EStG?
Yes. If a deduction under § 33 EStG is not possible — for example, because the reasonable burden threshold is not exceeded — the labor costs included in the tradesperson's invoice can be claimed at 20 % under § 35a EStG. The tax authorities have expressly recognized this. Material costs, however, are not eligible.
As of: June 2022
Can home emergency call systems qualify for tax relief in other configurations?
Yes. The BFH expressly left open the possibility that a tax reduction under § 35a Abs. 2 EStG may apply if the circumstances differ from the case decided. For example, if payment is not made for an external on-call service, or if the system includes immediate on-site assistance within the household, eligibility for tax relief must be assessed on a case-by-case basis.
As of: May 2023
Can the costs of wastewater disposal be claimed as a household-related service?
Fees for municipal wastewater disposal are not eligible under § 35a Abs. 2 EStG. These charges finance services performed outside the household, namely the transport and treatment of wastewater as well as the construction and maintenance of municipal sewers. Only expenses incurred directly within your own household qualify under the tax authorities' official list.
As of: January 2023
Can tenants claim household-related services under § 35a EStG even if they did not enter into the contract themselves?
Yes. The BFH has ruled that tenants can claim the tax reduction under § 35a EStG even if the contract with the service provider or tradesperson was concluded by the landlord or property manager rather than by the tenant. The decisive factor is that the service is performed in the tenant's household and benefits the tenant.
As of: August 2023
Can mini-jobbers work more hours under the new 520-euro threshold than before?
No, despite the increase the possible number of hours actually decreases slightly. At a minimum wage of 9.60 euros and a 450-euro threshold, around 46.9 hours per month were possible; at 12 euros and 520 euros, it is only about 43.3 hours. Mini-jobbers can therefore work roughly 3.5 hours less per month.
As of: March 2022
Can solo self-employed individuals apply for both Neustarthilfe and Überbrückungshilfe III?
No. Companies and solo self-employed individuals must choose between Neustarthilfe (restart aid) and Überbrückungshilfe III (bridging aid III). The decision should be made in consultation with a certified third-party reviewer, as the two programs cannot be claimed in parallel.
As of: April 2021
Can taxi costs for trips to the primary place of work be deducted beyond the commuter allowance?
No. According to BFH case law, a taxi does not qualify as public transport, so trips between home and the primary place of work by taxi are only deductible at the commuter allowance rate (€0.30 per kilometer of distance in the years in dispute). The option under § 9 Abs. 2 S. 2 EStG to deduct higher actual costs does not apply.
As of: December 2022
Can renovation costs for age-appropriate living be claimed for tax purposes?
Yes, home renovation costs can be deducted as außergewöhnliche Belastungen (extraordinary expenses) if they are exclusively necessitated by illness or disability. The costs must be reasonable and customary for age-appropriate or disability-accessible features. This applies to both new builds and the renovation of existing homes.
As of: November 2019
Can relocation expenses be claimed without receipts?
Yes, for miscellaneous relocation expenses you may choose between itemized proof and the flat-rate amount under the Bundesumzugskostengesetz (BUKG, German Federal Relocation Expenses Act). Transport costs, travel expenses, rent compensation and broker fees, however, must generally be substantiated by receipts.
As of: August 2021
Can maintenance payments for one's own children be deducted for tax purposes?
Maintenance payments for one's own children can only be claimed as an extraordinary expense (außergewöhnliche Belastung) if neither child benefit (Kindergeld) nor the child tax allowance (Kinderfreibetrag) is claimed for the child. In all other cases, maintenance payments are already covered for tax purposes by Kindergeld or the Kinderfreibetrag.
As of: April 2021
Can accommodation costs be deducted if the employer provides company housing?
Yes, provided the employee actually bears a financial burden, for example through a company housing charge withheld from their salary. If, however, the costs are fully reimbursed by the employer or the housing is provided free of charge, a deduction as work-related expenses is not possible.
As of: November 2023
Can those affected by storm damage have their tax prepayments reduced?
Yes, affected private individuals and businesses can apply to the competent Finanzamt (tax office) for a reduction of their tax prepayments. As a rule, proof of being affected is sufficient for the application. Alternatively, a deferral of the prepayments is also possible — in the case of the July 2021 storm, until 31 January 2022.
As of: October 2021
Can payments to a school support association be deducted as tuition fees?
According to a ruling by the FG Münster (Münster Tax Court), payments to a school support association (Förderverein) can also qualify as tuition fees for the purpose of special expense deductions, provided that the funds cover school-related costs and are forwarded accordingly. The decisive factor is not the label "tuition fee" but whether the costs are school expenses that would otherwise be publicly funded at state schools. A final decision by the BFH is still pending.
As of: February 2024
Can new owners deduct income-related expenses in advance under a reserved usufruct?
No, the BFH denies the deduction of anticipated income-related expenses by the new owner when the property has been transferred subject to a reserved usufruct (Vorbehaltsnießbrauch). The required temporal connection with future rental income is missing, since the end of the usufruct cannot be foreseen.
As of: October 2023
Can sports clubs invoke Art. 132(1)(m) of the VAT Directive?
No, a direct reliance on the VAT exemption under Art. 132(1)(m) of the VAT Directive is no longer possible following the CJEU judgment of 10 December 2020 (C-488/18) and the subsequent BFH decision. This applies in particular if the club's non-profit status is doubtful or if no binding allocation of assets to charitable purposes exists.
As of: May 2022
Can taxpayers rely on the ruling of the FG Berlin-Brandenburg?
Yes. Since the tax office did not file an appeal, it can be assumed that the tax authorities accept the decision. Taxpayers in comparable cases can therefore rely on the ruling. However, an identical positive outcome is not guaranteed, as each case must be assessed individually.
As of: January 2023
Can Überbrückungshilfen III Plus and Neustarthilfen Plus be applied for at the same time?
No, a parallel application is not possible. Solo self-employed individuals and other eligible applicants must choose between Überbrückungshilfen III Plus and Neustarthilfen Plus.
As of: November 2021
Does applying § 10 Abs. 4b EStG to prior years violate the prohibition of retroactivity?
No. The rules in force since 2012 apply to all reimbursements received after 31 December 2011, even if the underlying contributions were paid in earlier assessment periods. The BFH does not consider this a violation of the constitutional prohibition of retroactivity.
As of: August 2023
Does a compulsory auction constitute a private disposal transaction?
Yes, a compulsory auction qualifies as a private disposal transaction within the meaning of § 23 Abs. 1 Nr. 1 EStG. The reasoning is that the owner can avert the auction by settling their outstanding liabilities. This option is regarded as a deliberate act on the part of the taxpayer.
As of: May 2022
Does the symbolic purchase of a mobile phone constitute abuse of legal structuring under § 42 AO?
No, the BFH rejects abuse of legal structuring. Purchasing employees' private mobile phones is a straightforward way to acquire business devices, especially since employees must return the devices when their employment ends. The amount of the acquisition costs is irrelevant for the tax exemption under § 3 Nr. 45 EStG.
As of: February 2023
Is it tax-beneficial to defer the start of retirement?
From a tax perspective, deferral is generally disadvantageous, as the taxable portion increases with each later starting year while the tax-free portion is permanently reduced. This is offset, however, by higher pension payments resulting from the upward adjustment of accrued entitlements. An individual comparative calculation is therefore advisable before making a decision.
As of: April 2023
Will waiving the small business regulation still be worthwhile when purchasing a PV system in the future?
Most likely not. Since the supply and installation of PV systems and related components will be subject to a zero VAT rate, no VAT will be charged on the purchase. This eliminates the main reason for waiving the small business regulation, which was to reclaim input VAT.
As of: October 2022
At what values must assets be recognised in the inventory?
As a rule, assets must be valued individually at their (amortised) acquisition or production cost. Incidental costs such as transport, commissioning or financing costs must also be taken into account. For inventories, simplified methods such as LIFO, FIFO or the weighted average method under Section 240 (3) and (4) HGB are permissible under German commercial law.
As of: November 2023
Must the purchase agreement between employer and employee withstand an arm's length comparison?
According to the BFH, no arm's length comparison is required in this constellation. Employer and employee form a natural community of interests in which both sides safeguard their economic interests. A private personal relationship that would render a symbolic purchase price suspicious is generally not present.
As of: February 2023
Does the inflation compensation bonus need to be reported in the tax return or on the income tax certificate?
No, the tax-free IAP does not have to be reported either on the income tax certificate (Lohnsteuerbescheinigung) or in the income tax return. It is also not subject to the progression clause (Progressionsvorbehalt), so there is no risk of a subsequent increase in your income tax burden.
As of: January 2023
Does the Neustarthilfe (restart aid) have to be repaid?
The payment is initially made as an advance. After the end of the funding period (30 June 2021), the actual revenues generated must be reported. If revenue during the funding period is no more than 40% of the reference revenue, the advance may be retained in full. If revenues exceed this threshold, a proportional repayment is required.
As of: March 2021
Does the rent still have to be split when operating equipment is leased along with the property?
No. Following the ECJ ruling (EU:C:2023:372) and the subsequent BFH decision, the splitting requirement no longer applies if the leasing of operating equipment constitutes an ancillary service to the principal service (leasing of land/building) between the same contracting parties. In that case, there is a single economic supply that may be exempt from VAT in its entirety.
As of: September 2023
Does the caregiver have to pay tax on the travel expense reimbursement received?
No, the travel expense reimbursement is considered a pure expense allowance and not income. It is therefore not taxable for the caregiver. For the taxpayer, two-thirds of the travel expenses are nevertheless deductible as Sonderausgaben (special expenses), provided a proper record with date and route is available.
As of: May 2022
Must there be a temporal connection between the habilitation and the employment relationship?
A close temporal connection between completing the habilitation and starting an employment relationship is not required. It is sufficient if the habilitation is beneficial for the subsequent professional appointment or activity. This establishes the necessary causal link to employment income.
As of: August 2022
Must care-related conversion costs be separated from other renovation measures?
Yes, a clear separation of disability-related conversion costs from general modernization or renovation measures is strictly required. Only the costs solely attributable to a disability or illness are deductible as außergewöhnliche Belastung (extraordinary expenses). Appropriate documentation and, where applicable, a medical certificate should be available.
As of: November 2019
Must SFN supplements be paid in addition to the base wage?
Yes, supplements for Sunday, public holiday, or night work are exempt from tax and social security contributions only if they are granted on top of the base wage. Offsetting them against the base wage is not permitted. Otherwise, the supplements lose their tax and contribution exemption.
As of: May 2022
Must tips paid to employees be recorded?
In principle, there was no recording obligation for tips paid to employees. However, with the introduction of electronic cash registers with a certified technical security module (TSE), the tax authorities now require cash tips to be booked as a separate transaction unless they are clearly separated from the cash on hand. Non-cash tips (EC or credit card) must always be secured via the TSE.
As of: May 2021
What allocation method applies when splitting the capital gain in cases of partial third-party letting?
Allocation is based on the ratio of living areas: the area continuously used for the owner's own residential purposes is set in relation to the area let to third parties on a day-by-day basis. Only the portion of the capital gain attributable to the rented rooms is taxable under § 22 Nr. 2 in conjunction with § 23 EStG.
As of: July 2023
What criteria determine the tax classification as a Minijob?
Whether marginal employment exists is determined exclusively by social security law criteria (§ 8 SGB IV). This ensures alignment between the social security and wage tax treatment and avoids any divergence between them.
As of: February 2023
Do partnerships also benefit from the planned PV tax exemption?
Yes, general partnerships, limited partnerships and other partnerships are also to be exempted from tax if the operation of a PV system alone leads to classification as a commercial enterprise under § 15 Abs. 3 Nr. 1 EStG. The above-mentioned capacity thresholds must be observed.
As of: October 2022
Is the service charge statement sufficient as proof for the tax reduction under Section 35a EStG?
Yes, a residential service charge statement or a certificate following the template of the tax authorities (Annex 2 of the BMF letter dated 9 November 2016) is sufficient as proof. However, the statement must show the type, content and date of the service, the service provider and recipient, as well as the fee owed, including a reference to the cashless payment.
As of: August 2023
Is a single eligible child sufficient to secure the tax exemption under Section 23 EStG?
No. The BFH has ruled that the mere co-use of the dwelling by children who no longer qualify under Section 32 EStG precludes the tax exemption. Even if a younger child eligible for child benefits also lives in the dwelling, use by the children who no longer qualify is detrimental to the tax exemption.
As of: October 2023
Is continuous personal use during the middle year sufficient for the three-year rule under § 23 EStG?
Yes. According to BFH case law (IX R 37/16), it is sufficient if the property is used continuously for own residential purposes throughout the middle calendar year of the three-year period. In the year of sale and the year preceding it, partial use is sufficient, provided that overall there is an uninterrupted period of personal use.
As of: July 2023
Are employer subsidies to short-time work benefits tax-free?
Employer subsidies to short-time work benefits (Kurzarbeitergeld) are generally tax-free during the period from 1 March 2020 to 31 December 2021. However, if the short-time work benefits and the subsidy together exceed 80 percent of the original gross wages, the excess portion is subject to retroactive taxation. Regardless of this, the subsidies are subject to the progression clause (Progressionsvorbehalt).
As of: May 2021
Are business expenses related to tax-exempt PV systems deductible?
Due to the tax exemption of income and withdrawals, the deduction of business expenses is also excluded under § 3c Abs. 1 EStG. For privately operated PV systems, however, costs for repair or maintenance work may be claimed as household-related tradesman services under § 35a EStG to reduce tax. Special rules apply to PV systems within a business not exclusively focused on electricity generation, where a deduction of business expenses remains possible in certain constellations.
As of: August 2023
Are income taxes from a retroactive business closure by heirs deductible as estate liabilities?
No. According to the BFH ruling of 10 May 2023 (II R 3/21), income taxes on a closure gain arising from a business closure declared by the heirs under § 16 Abs. 3b S. 3 EStG cannot be deducted as estate liabilities under § 10 Abs. 5 Nr. 1 ErbStG. The decisive factor is that the tax-triggering event was not realised by the decedent, but by the heirs themselves.
As of: October 2023
Are travel expenses for childcare deductible even without remuneration?
Yes. The BFH ruled in 1998 (III R 94/96) that travel expenses are deductible as special expenses under § 10 Abs. 1 Nr. 5 EStG. According to the Fiscal Court of Baden-Württemberg, this applies even if the caregiver receives no remuneration. A flat rate of €0.30 per kilometer of distance may be applied.
As of: May 2022