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 6 / 14
Why is deducting expenses as Werbungskosten (income-related expenses) more advantageous than as Sonderausgaben (special expenses)?
Werbungskosten can be claimed even with no or low income, provided there is a connection to your future profession. If they exceed your income, a loss carryforward is possible and can be offset against higher income in later years. Sonderausgaben, by contrast, are forfeited if no income exists and are capped at EUR 6,000 per year.
As of: August 2023
Why is the extended trade tax deduction particularly contentious in practice?
There is a significant difference in trade tax burden between the simple and the extended deduction, as the extended version allows for a complete exemption of real estate income. For this reason, it is reviewed restrictively by the tax authorities and is frequently the subject of tax court proceedings. Careful structuring and documentation are therefore advisable.
As of: March 2023
Why is the expropriation of real estate not a private sale transaction under § 23 EStG?
In the case of expropriation, the owner lacks the personal intent to transfer the property. However, since a private sale transaction requires a voluntary transfer by the taxpayer, the requirements of § 23 EStG are not met. A taxable sale is therefore ruled out.
As of: May 2022
Why is the date of the notarial purchase agreement not decisive for the purchase price allocation?
For assessing acquisition costs, the date of delivery is decisive. For real estate, this is the date on which possession, benefits, risk, and burdens actually pass to the buyer. The notarial signing initially only creates the contractual obligation.
As of: January 2023
Why did the tax office reject the deduction of donations to the school support association as tuition fees?
The tax office argued that the payments to the support association were not made exclusively for school attendance, but also covered events, study trips and school field trips. Such services were not covered by the tuition fee definition under § 10 Abs. 1 Nr. 9 EStG. The Finanzgericht Münster rejected this narrow interpretation.
As of: February 2024
Why does the legislator classify initial vocational training costs as special expenses (Sonderausgaben)?
Initial vocational training is regarded as a basic prerequisite for personal lifestyle and provision for one's own livelihood. It conveys not only professional knowledge but shapes the individual as a whole and is typically still covered by the parents' maintenance obligation. For these reasons, it is deemed to be of mixed (private and professional) origin.
As of: February 2020
Why are unmarried couples disadvantaged for tax purposes in inheritance and gift situations?
Partners without a marriage certificate or registered civil partnership are treated as unrelated persons for tax purposes and fall into tax class III. They receive only a general allowance of EUR 20,000, while married partners are entitled to EUR 500,000. In addition, a 30% inheritance tax rate applies from the very first euro of taxable transfer.
As of: January 2022
Why should gratuitous real estate transfers be completed before 01/01/2023?
The reform of the German Valuation Act (Bewertungsgesetz) is expected to result in significantly higher property valuations, which will increase gift and inheritance tax on gratuitous transfers. Planned gifts or anticipated inheritances should therefore be finalized before the new rules take effect on 01/01/2023. Whether an early transfer makes sense in a specific case should be reviewed with a Steuerberater (German Certified Tax Advisor).
As of: November 2022
Why does § 35a EStG require the service to be performed within the household?
Under § 35a Abs. 4 Satz 1 EStG, the household-related service must be performed within a household of the taxpayer located in the EU or EEA. The service must have a sufficient connection to the running of the household. If the essential part of the service is performed outside the household — for example, in a central emergency call center — this spatial connection is lacking.
As of: May 2023
Why was the tax exemption denied in the BFH case IX R 11/21?
The plaintiff had moved out of the joint home two years before the sale, so there was no longer any personal residential use. Indirect own use based on the maintenance obligation toward the child failed because the divorced wife also continued to live in the property. As a result, the capital gain within the 10-year holding period was fully taxable.
As of: August 2023
Why is the marginal earnings threshold being adjusted at all?
The threshold had remained unchanged at €450 since 2013, while the minimum wage rose every year. As a result, minijob employees had to regularly reduce their working hours in order not to lose tax advantages. The increase is intended to at least partially correct this imbalance and create incentives to move into the transition zone.
As of: March 2022
Why was the commuter allowance increased from the 21st kilometer onwards?
The increase is part of the Climate Protection Programme 2030 and is intended to provide temporary relief for commuters with longer journeys to work. With this measure, the legislator aims to support a socially balanced mobility transition.
As of: December 2020
Why was the commuter allowance increased as part of the 2030 Climate Protection Programme?
The increase was introduced to offset rising fuel costs caused by CO2 pricing. As petrol and diesel become more expensive, commuters with longer journeys to work are to receive tax relief through the higher distance allowance.
As of: March 2020
Why was the interest rule under § 233a AO reformed?
In its decision of 08.07.2021 (1 BvR 2237/14, 1 BvR 2422/17), the Federal Constitutional Court ruled that the interest rate of 6 % per year was unconstitutional, as it no longer reflects market rates given the prolonged low-interest environment. For the years 2014 to 2018, the previous rule still applies, but from 2019 onwards the Federal Government was required to establish a new regulation.
As of: May 2022
What does 'purpose-related compensation' mean in the context of the reduced tax rate for overtime?
The payment must be made for a specific reason that justifies the lump-sum compensation – typically the termination of the employment relationship. An arbitrary or routine bulk payment is not sufficient. Only if the underlying reason explains the one-time payment do the overtime payments qualify as extraordinary income within the meaning of § 34 EStG.
As of: March 2022
What does the BFH ruling VI R 7/21 mean for seniors with a home emergency call contract?
Seniors who use a classic home emergency call contract with device provision and an external 24-hour call center without on-site response cannot claim the costs as a household-related service under § 35a EStG. The tax office will reject such expenses in the income tax return. A review is only worthwhile for contract models that differ from this standard setup.
As of: May 2023
What does the BSG ruling mean for Rechtsanwälte (German Attorneys-at-Law) who commission a web designer on a one-off basis?
If a web designer is commissioned on a one-off basis to create a law firm website, no artists' social security contribution (Künstlersozialabgabe) is payable – even if the fee exceeds the EUR 450 threshold. The prerequisite is that no further artistic or journalistic assignments are commissioned within the audit period.
As of: August 2022
What does the planned zero VAT rate for PV systems mean?
A VAT rate of 0% is to apply to the supply, intra-Community acquisition, import and installation of PV systems and their components (e.g. storage units). This applies to systems on or near private dwellings, apartments, and public or community-serving buildings. For an installed gross capacity of up to 30 kW (peak), the requirements are automatically deemed to be met.
As of: October 2022
What does the requirement of 'reasonable costs' mean for conversion measures?
Reasonable costs are those that are customary and necessary for age-appropriate or disability-appropriate equipment. Luxurious features or those exceeding what is medically necessary are not recognized for tax purposes. The benchmark is the average expense for a comparable barrier-free solution.
As of: November 2019
What does the cash-basis principle (Zufluss-/Abfluss-Prinzip) under §11 EStG state?
Under §11 EStG, income and expenses are generally recognized for tax purposes in the calendar year in which they are actually received or paid. The decisive factor is the actual payment date, not the economic period to which the transaction relates. This rule governs the timing of cash flows for tax purposes.
As of: February 2022
What does the 6-year holding period under § 6b EStG require?
Under § 6b EStG, hidden reserves from the sale of fixed assets may only be transferred to replacement assets if the asset sold belonged uninterruptedly to the fixed assets of a domestic permanent establishment for at least 6 years. According to BFH case law, the asset must have been part of the business assets of the selling taxpayer itself, not merely of any domestic permanent establishment.
As of: August 2022
What does the grandfathering rule for employees earning EUR 450.01 to EUR 520 stipulate?
Employees who were previously subject to mandatory insurance with earnings between EUR 450.01 and EUR 520 remain subject to mandatory health, long-term care, and unemployment insurance until 31 December 2023 under grandfathering provisions. Grandfathering does not apply to pension insurance; here, employees automatically switch to the flat-rate accounting for marginal employment as of 1 October 2022.
As of: September 2022
What is the purpose of the trade tax reduction for real estate under § 9 No. 1 GewStG?
The reduction is intended to mitigate or avoid the double taxation of real estate with both property tax (Grundsteuer) and trade tax (Gewerbesteuer). Since both are real taxes (Realsteuern), the same real estate would be taxed twice without this provision. § 9 No. 1 GewStG therefore provides for a simple reduction and an extended reduction.
As of: March 2023
What does the KöMoG enable partnerships to do?
Under the Act to Modernize Corporate Income Tax Law (KöMoG) of 21 May 2021, partnerships and professional partnerships can elect to be taxed as a corporation. Instead of the partners' individual income tax (transparency principle), the total profit is then subject to 15% corporate income tax. The aim is to improve international competitiveness.
As of: July 2021
What qualifies as a token of appreciation (Aufmerksamkeit) under VAT law?
Tokens of appreciation are non-cash gifts of up to EUR 60 given to an employee on a special personal occasion such as a birthday or wedding, for example flowers or small luxury items. Beverages and small luxury items provided free of charge at the workplace also fall into this category. Such gifts do not constitute a significant enrichment of the employee and entitle the employer to input VAT deduction.
As of: August 2023
What applies for tax purposes in the case of a rental arrangement not intended to be permanent?
If a rental arrangement is not intended to be permanent, the taxpayer must prepare a forecast covering a 30-year period and demonstrate that an overall surplus will be generated. If this proof cannot be provided, losses will not be recognized for tax purposes.
As of: January 2021
What qualifies as a company event for tax purposes?
Company events (Betriebsveranstaltungen) are events held at the company level with a social character that serve to foster the working atmosphere and contact between employees. To qualify for preferential tax treatment, the event must be open to all employees of the business.
As of: December 2019
What qualifies as typical occupational clothing for tax purposes?
Typical occupational clothing is apparel specifically tailored to a professional group and used almost exclusively for work. This includes uniforms (e.g., police), clothing with permanent company branding, protective gear (helmets, safety shoes, work gloves), and profession-specific items such as a doctor's coat or a lawyer's robe. Private use must be virtually excluded; otherwise, the deduction as work-related expenses (Werbungskosten) does not apply.
As of: December 2021
Was gilt steuerlich beim Minijob?
Für geringfügige Beschäftigungen gelten besondere Pauschalierungs- und Verdienstregeln. Die Infografik finden Sie im Merkblatt-Verzeichnis unter "Geringfügige Beschäftigung Minijob". (Quelle: Deubner Verlag)
What did the FG Münster decide regarding the deductibility of waste and wastewater fees?
The FG Münster confirmed the tax authorities' view that neither waste nor wastewater fees are deductible under § 35a Abs. 2 EStG. The reasoning is that these services are typically not performed by members of the household and that the fees exclusively finance activities carried out outside the household. The appeal admitted to the BFH was dismissed as inadmissible due to a missed application deadline (decision of 01.09.2022).
As of: January 2023
What did the BFH rule in judgment III R 11/21 of 21 June 2023 regarding child benefit during studies abroad?
The BFH ruled that child benefit must be paid through December of the third year of study. In the first year, the absence of home visits was harmless because the studies were initially planned for only one year. In the second year, a 60-day visit met the predominance criterion. Only in the third year, with a visit of just 14 days, was it established that the daughter would not spend more than half of her vacation time at home, so her domestic residence – and thus the entitlement to child benefit – ceased as of January.
As of: October 2023
What has changed in terms of content for Bridging Aid III Plus (Überbrückungshilfe III Plus) for the fourth quarter of 2021?
In terms of content, Bridging Aid III Plus remains largely unchanged. The only change is the elimination of the restart bonus for reopening businesses, as the federal government considers it to have fulfilled its purpose.
As of: November 2021
Was ist bei der Gründung einer GmbH zu beachten?
Von der Satzung bis zur Eintragung sind bei der GmbH-Gründung mehrere Schritte zu beachten. Die Infografik finden Sie im Merkblatt-Verzeichnis unter "GmbH-Gründung". (Quelle: Deubner Verlag)
What is the One-Stop-Shop procedure (OSS)?
The OSS is a procedure introduced on 1 July 2021 for the simplified VAT declaration of companies supplying services to private individuals in other EU Member States. It extends the previous Mini One-Stop-Shop procedure to include additional services, in particular intra-Community distance sales. Affected companies can centrally remit the VAT owed in other EU countries to the German Federal Treasury via the Federal Central Tax Office (BZSt).
As of: June 2021
What is Realsplitting for maintenance payments to divorced spouses?
Under Realsplitting pursuant to § 10 Abs. 1a Nr. 1 EStG, the payer may deduct maintenance payments to a divorced or permanently separated spouse as special expenses up to €13,805 per year, increased by any health and long-term care insurance contributions assumed. The recipient must declare the payments as other income and consent to the application via Anlage U. The payer is obliged to compensate the recipient for any resulting tax and social security disadvantages.
As of: April 2021
What is the SanInsFoG and when did it take effect?
The Sanierungs- und Insolvenzrechtsfortentwicklungsgesetz (SanInsFoG, German Act on the Further Development of Restructuring and Insolvency Law) transposes the European Restructuring and Insolvency Directive of 19 June 2019 into German law. It was passed by the Bundestag on 17 December 2020 and came into force on 1 January 2021. Its aim is to avert imminent corporate insolvencies and prevent lengthy insolvency proceedings by granting companies greater self-responsibility.
As of: April 2021
What is the age relief amount (Altersentlastungsbetrag) under § 24a EStG?
The Altersentlastungsbetrag is a tax allowance for elderly taxpayers that reduces the taxation of certain types of income. It is intended to compensate for the fact that income such as wages or rental income remains fully taxable in old age, while pensions are only partially taxed. The provision is set out in § 24a EStG.
As of: February 2022
What is the difference between Grundsteuer A and B?
Grundsteuer A (property tax A) is levied on agricultural and forestry properties such as farms, arable land, or forest holdings. Grundsteuer B (property tax B) applies to all other developed or developable properties, including residential property as well as rental and commercial real estate.
As of: March 2021
What is the difference between inventory list and stocktaking?
The inventory list (Inventar) is the written record of all assets and liabilities, including quantities and values. Stocktaking (Inventur), by contrast, refers to the actual physical recording of stock through measuring, counting, and weighing. In other words, stocktaking is the activity, while the inventory list documents its results.
As of: November 2023
What is the €110 flat rate for work equipment and when is it worthwhile?
Without itemized proof, the tax office accepts a flat rate of €110 per year for all work equipment of an employee, including specialist literature, office supplies, and work clothing. Since the flat rate covers all work equipment combined, it is quickly exceeded. Higher amounts can only be deducted with receipts and invoices.
As of: December 2021
What is the tax base of the real estate transfer tax under Sections 8 and 9 GrEStG?
Pursuant to Section 8 (1) GrEStG, the tax base is the consideration paid by the purchaser. Under Section 9 (1) GrEStG, this includes all services rendered by the purchaser, in particular the purchase price together with any other obligations assumed. The decisive factor for determining the scope of the consideration is the condition of the property at the time the purchase agreement is concluded.
As of: December 2022
What is the inflation compensation bonus (Inflationsausgleichsprämie) and what is the maximum tax-free amount?
The Inflationsausgleichsprämie (IAP) is a voluntary employer benefit designed to help employees cope with inflation-related financial burdens. It can be granted free of tax and social security contributions up to a total amount of EUR 3,000 during the eligible period from 26 October 2022 to 31 December 2024. This maximum applies to the entire period, not per year.
As of: January 2023
What is the mobility allowance and who was it created for?
The mobility allowance (Mobilitätsprämie) is a state subsidy for low-income commuters whose taxable income falls below the basic tax-free allowance (2022: €9,984). Since these individuals pay no income tax, the increased commuter allowance (Entfernungspauschale) would have no relieving effect for them. The Mobilitätsprämie provides compensation so that low earners can also benefit from the increased commuter allowance.
As of: March 2022
What is the Wirtschafts-Identifikationsnummer (W-IdNr., German Economic Identification Number)?
The W-IdNr. under § 139c AO is a nationwide uniform business identification number for enterprises. It serves as the primary key in the new corporate base data register under the UBRegG and aims to reduce bureaucracy and increase transparency in taxation procedures by harmonising various tax types and administrative processes.
As of: September 2024
What is the extended trade tax deduction under §9 Nr. 1 Satz 2 GewStG?
It allows companies that exclusively manage and use their own real estate (and, where applicable, their own capital assets) to reduce their trade income by the portion attributable to the management and use of the real estate. The prerequisite is that the activity does not exceed the scope of private asset management. If the activity is genuinely commercial in nature, the deduction is excluded.
As of: June 2024
What is a fictitious family residence under Art. 67 EC Regulation 883/2004?
A fictitious family residence exists when a family member already lives and works in an EU member state, so that the remaining family members are treated as if they also resided there. Under German child benefit law, this is sufficient to establish residence. As a result, a claim to child benefit can arise even before the family actually moves to Germany.
As of: February 2021
What is an intra-Community triangular transaction?
An intra-Community triangular transaction is a special form of chain transaction under § 25b UStG. It involves three businesses from three different EU member states concluding sales transactions over the same goods, with the goods moving directly from the first supplier to the final customer. The transport or dispatch must be carried out by the first supplier or the first purchaser, and the goods must move from one member state to another.
As of: February 2024
What is a prepayment penalty (Vorfälligkeitsentschädigung)?
A Vorfälligkeitsentschädigung is the compensation a borrower must pay to the lender when a loan is repaid before the end of the agreed fixed-interest period. It compensates the bank for the lost interest income and typically arises when a loan is repaid early in connection with the sale of a property.
As of: February 2024
What can a tenant do if the tax office does not accept the service charge statement as proof?
If the required information is not evident from the service charge statement or the property management statement, the tenant must obtain copies of the underlying invoices from the landlord or property management and submit them to the tax office. In addition, operating cost statements may be filed as supplementary evidence.
As of: August 2023
Was muss ich zur E-Rechnungs-Pflicht beachten?
Im B2B-Bereich gelten gestufte Pflichten zur elektronischen Rechnung. Die Infografik finden Sie im Merkblatt-Verzeichnis unter "E-Rechnungen". (Quelle: Deubner Verlag)