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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2304 questions · Page 17 / 47
When are payments to a school support association donations and when are they considered payment for services?
If the support association acts selflessly and is recognized as a non-profit organization, payments can be deducted as special expenses (Sonderausgaben) by means of a donation receipt. However, if the support association covers school operating costs that are not publicly funded, or if the school depends on these funds, the payment does not qualify as a donation but as a payment for services. In this case, only a deduction as school fees pursuant to § 10 Abs. 1 Nr. 9 EStG is possible.
As of: February 2024
When are extraordinary write-downs relevant during the coronavirus pandemic?
Extraordinary write-downs have become more important during the pandemic, as many businesses are facing lost revenue and inventory value losses due to missing customers. A typical example is seasonal goods in retail (e.g., winter clothing) that could not be sold because of lockdowns and have permanently lost value. The pandemic qualifies as an extraordinary event that justifies a corresponding write-down at the balance sheet date.
As of: April 2021
When are the actual costs of a home office fully deductible without limitation?
The EUR 1,250 cap does not apply if the home office constitutes the centre of all business and professional activity. In this case, the actual expenses can be deducted in full as income-related expenses or business expenses.
As of: August 2016
When are anticipated income-related expenses exceptionally deductible in cases of usufruct?
A deduction is possible if the end of the usufruct is concretely foreseeable and the new owner incurs the expenses recognizably in view of the upcoming personal use for generating income. Both conditions must be met cumulatively.
As of: October 2023
When are accommodation and meal expenses still deductible during a full-time educational program?
A deduction is only possible if a second household is maintained at the location of the course or studies due to the educational program. The business-travel rules do not apply, as the educational institution qualifies as the primary place of activity (erste Tätigkeitsstätte).
As of: October 2020
When does the electronic wage tax procedure (ELStAM) start for employers?
As of January 1, 2013, employers are generally required to apply the electronic wage tax deduction procedure (ELStAM). The electronic retrieval of wage tax deduction features thus replaces the previous paper wage tax card.
As of: November 2012
When did the first automatic exchange of information on financial accounts start in Germany?
The first automatic exchange of information on financial accounts under the OECD reporting standard began on 30.09.2017. Germany participated from the outset, together with 49 other states and territories. Additional countries were scheduled to join as of 30.09.2018.
As of: September 2017
When is a taxpayer entitled to the disposal allowance under § 16 Abs. 4 EStG?
The EUR 45,000 allowance is granted if the taxpayer has reached the age of 55 or is permanently incapacitated for work within the meaning of social insurance law. It is granted only once in a lifetime and is reduced by the amount by which the capital gain exceeds EUR 136,000.
As of: November 2022
When does the new EU Financial Regulation enter into force?
The new EU Financial Regulation was formally adopted on 25 October 2012 and enters into force on 27 December 2012, following its publication in the Official Journal of the EU. The practical improvements for recipients of EU funds will apply from 1 January 2013.
As of: November 2012
When does the leasing of a shopping center cease to qualify as private asset management?
The threshold to commercial activity is crossed when the additional services provided go beyond the infrastructure typical for a shopping center and begin to dominate the leasing activity. As long as the services merely cover the necessary infrastructure, the activity remains private asset management.
As of: January 2017
When does a tip paid to an employee lose its tax-exempt status?
The tax exemption no longer applies if the employer first retains the tip and decides on its distribution to employees. In this case, the tip is treated as taxable wages. Mandatory service charges are likewise not tax-exempt.
As of: May 2021
When was the obligation to file for insolvency suspended in connection with Corona aid?
The obligation to file for insolvency was suspended until 30 April 2021, provided that the company had applied for Corona aid between 1 November 2020 and 28 February 2021. Outside of this exception, the following still applies: in the event of illiquidity, the application must be filed within 3 weeks; in the event of over-indebtedness, within 6 weeks.
As of: April 2021
When do supplements in a Minijob become taxable?
Supplements become taxable if they are paid without an actual work performance being rendered. This typically applies to payments during the employment ban under maternity protection or during continued remuneration in case of illness. Once they are taxable, these supplements generally also lose their exemption from social security contributions.
As of: May 2022
When is an intent to generate income assumed in the case of a holiday apartment?
An intent to generate income is generally assumed when the holiday apartment is rented out or made available exclusively to changing holiday guests throughout the year and personal use is ruled out. This applies, for example, when the rental is delegated to an agency or tourist board and personal use is contractually excluded for the entire year. Additionally, if the landlord owns another apartment in the immediate vicinity, this further supports the absence of personal use.
As of: January 2021
When will the 2021 child bonus be paid out?
For children entitled to child benefit (Kindergeld) in May 2021, the child bonus will be paid out in May 2021. If the entitlement to child benefit arises only later in 2021, the bonus will be paid out accordingly later.
As of: March 2021
When does the tenant become the economic owner of a tenant fixture?
The tenant becomes the economic owner when the landlord's claim for return of the installed assets at the end of the lease no longer has any economic significance. This is the case if the installed item will be technically or economically consumed during the expected lease term, or if the tenant can expect at least reimbursement of the fair market value at the end of the lease.
As of: July 2023
When will the statutory minimum wage be raised to €12 per hour?
On 23 February 2022, the German Federal Cabinet adopted a draft law under which the minimum wage will rise to €12 per hour effective 1 October 2022. The increase is intended to benefit primarily employees in marginal employment (Minijobs) and in low-wage occupations.
As of: March 2022
When is the purchase price claim in a real estate sale not measured at face value?
Only if special circumstances exist at the time the contract is concluded that result in a higher or lower value may the face value be departed from. A subsequent inability to collect, for example due to insolvency, does not qualify as such a circumstance and therefore does not trigger a change in valuation.
As of: October 2016
When does the complexity of German tax law become particularly challenging for clients?
Even a standard tax return is difficult for many citizens to understand. As soon as real estate, a business, or international ties come into play, the complexity increases significantly. In such cases, professional tax advice from a Steuerberater (German Certified Tax Advisor) is generally indispensable.
As of: June 2024
When is an eBay seller classified as an entrepreneur for VAT purposes?
A business activity exists when the seller acts on the market like a trader, for example by deliberately purchasing goods for resale. The number of sales alone or the use of the same platform does not establish entrepreneurial status. Decisive factors are the overall circumstances, such as purchasing behavior, systematic approach, and sustained intent to sell.
As of: September 2012
When was the Cash-GmbH model abolished by law?
With the Amtshilferichtlinie-Umsetzungsgesetz (Mutual Assistance Directive Implementation Act) of 26 June 2013 (BGBl. I 2013 p. 1809), the legislator ended the Cash-GmbH model retroactively as of 7 June 2013. An originally planned retroactive effect to 1 January 2013 failed during the legislative process. Since then, it has no longer been possible to contribute cash assets to a GmbH and subsequently gift the company tax-free.
As of: August 2013
Was the Federal Constitutional Court's ruling on the childcare allowance unanimous?
Yes, the First Senate's ruling of 21 July 2015 was issued unanimously. Accordingly, there is no dissent within the Senate regarding the lack of federal legislative competence for the childcare allowance (Betreuungsgeld).
As of: August 2015
Was business consulting provided by Steuerberater eligible for funding?
Yes. Under the Corona module of the framework guideline promoting entrepreneurial know-how, business consulting provided by Steuerberatern (German Certified Tax Advisors) was explicitly eligible for funding. The prerequisite was that the company had been affected by the Corona pandemic.
As of: March 2020
Why do transport companies often install additional or larger tanks in their trucks?
Larger or additional fuel tanks serve to meet specific operational requirements, such as transporting containers or completing longer routes without refueling. They also allow companies to take advantage of diesel price differences between EU member states. Often, the original tank is relocated and supplemented with an additional tank holding several hundred liters.
As of: July 2013
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 does German inheritance tax law favor the transfer of business assets?
The legislator grants tax relief on the transfer of business assets primarily to safeguard jobs within the transferred companies. The Federal Constitutional Court has recognized this objective as a legitimate justification for the unequal treatment compared to other asset classes.
As of: December 2014
Why does the legislator treat public transport more favorably than cars or taxis?
With the transport-mode-independent distance allowance introduced on 1 January 2001, the legislator pursued environmental and transport policy goals. Use of scheduled public transport was no longer to be disadvantaged compared with the car. Since a taxi is used individually like a car and does not make a comparable ecological contribution, it is not granted privileged treatment.
As of: December 2022
Why does the vacation entitlement continue to exist despite the employee's death?
The right to paid annual leave is enshrined in the Charter of Fundamental Rights of the EU and consists of two components: the time off for recreation and the payment during the leave. Even if the recreational component can no longer be realized after death, the financial entitlement remains and can be inherited.
As of: November 2018
Why does the reduced wage entitlement remain in place even when short-time work allowance ceases?
Short-time work involves two levels: the employment contract level between employer and employee, and the social security level with the Bundesagentur für Arbeit (Federal Employment Agency). If only the social security level ceases to apply, the validly agreed short-time work remains effective at the contractual level. Otherwise, a dismissed employee would be in a better position than a colleague still employed under short-time work arrangements.
As of: March 2021
Why is the 30/70 method not suitable for takeaway sales?
Takeaway sales typically consist mainly of food without corresponding beverage consumption. The beverage revenue generated in the restaurant therefore does not allow reliable conclusions to be drawn about food sold off-premises. Extrapolating based on the 30/70 ratio would result in inflated and unrealistic revenue figures.
As of: March 2016
Why does the VAT exemption not apply to private customers in other EU countries?
The exemption for intra-Community supplies applies only to deliveries to businesses with a valid VAT identification number. For supplies to private individuals, this exemption does not apply, meaning the transactions must be taxed either in the country of dispatch or – once the delivery threshold is exceeded – in the country of destination.
As of: April 2016
Why did the BFH rule against a child benefit claim in the case of the Diplom-Finanzwirtin?
The BFH (judgment of 07.04.2022, III R 22/21) held that the subsequent law studies did not constitute the continuation of a single initial training, but rather a second course of education pursued alongside employment. Although there was a close temporal and substantive connection, the professional activity within the tax administration took precedence, particularly due to the long-term commitment to the employer. In addition, the employment exceeded the 20-hour threshold under § 32 Abs. 4 S. 2 EStG.
As of: June 2023
Why does the Münster Tax Court not recognise a general duty of effort as grounds for a provision?
In the court's view, a general duty of effort is primarily aimed at concluding new contracts and retaining existing business in the sense of acquisition. Such clauses are substantively indefinite and not enforceable under civil law. Breaches therefore remain without consequence, so no performance arrears arise that would justify a provision.
As of: December 2016
Why do property developers no longer fall under § 13b UStG according to recent BFH case law?
Following the BFH ruling of August 2013 and the BMF circular of 14 February 2014, § 13b UStG applies only if the recipient uses the construction service received for its own construction services. Property developers, however, do not provide construction services but deliver developed real estate. As a result, they no longer fall under § 13b UStG, and the construction contractor performing the work remains liable for the VAT.
As of: June 2014
Why are tenant compensation payments not covered by § 6 Abs. 1 Nr. 1a EStG?
The BFH limits the scope of this provision to structural measures on the building itself. Tenant compensation payments are only indirectly connected to the renovation work and are typically paid before the actual construction measures begin. As a result, both the substantive and temporal link to the repair and modernization measures is missing.
As of: April 2023
Why does the federal government lack legislative competence for the childcare allowance (Betreuungsgeld)?
The childcare allowance can, in principle, be classified as public welfare under Art. 74 Abs. 1 Nr. 7 GG, an area in which the federal government holds concurrent legislative competence. However, in the Court's view, the additional requirements of Art. 72 Abs. 2 GG (necessity clause) for a uniform federal regulation were not met.
As of: August 2015
Why does the German Federal Court of Auditors call for the complete abolition of the solidarity surcharge?
The Federal Court of Auditors sees significant constitutional and fiscal risks in only partially retaining the solidarity surcharge. Since the legal basis for the surcharge expires at the end of 2019 with the conclusion of Solidarpakt II, there is a risk that the federal government could be ordered to pay back billions in taxes—similar to the nuclear fuel tax case. A complete and prompt abolition would be more legally secure.
As of: June 2019
Why are tax firms introducing IT consultations before accepting new clients?
Digitalization is transforming data handover and requires coordinated technical processes. Before onboarding, the firm clarifies which systems, interfaces, and security standards the client has in place and how data exchange can be conducted efficiently and in compliance with GoBD (German Principles for Proper Bookkeeping in Electronic Form). Existing clients are also gradually integrated into this quality management approach.
As of: March 2017
Why does paying out several years of overtime without the one-fifth rule lead to a higher tax burden?
German income tax is progressive, meaning the tax rate rises as taxable income increases. If overtime compensation earned over several years is paid out in a single year, it sharply increases annual income and is subject to a higher marginal tax rate. Without a preferential tax treatment, this results in a disproportionately high tax burden.
As of: March 2022
Warum gehen bisher Verluste bei Körperschaften steuerlich verloren?
Nach bisheriger Rechtslage führt ein Wechsel der Anteilseigner oder die Aufnahme neuer Gesellschafter dazu, dass nicht genutzte Verlustvorträge einer Körperschaft anteilig oder vollständig wegfallen. Dies belastet insbesondere Unternehmen, die zur Wachstumsfinanzierung auf externe Kapitalgeber angewiesen sind, und soll durch die geplante Reform abgemildert werden.
As of: September 2016
Why are clearance costs considered estate administration costs rather than acquisition costs?
These costs are not directly connected to the settlement, regulation, or distribution of the estate, nor to the acquisition itself. The heir was legally able to accept the property even in its cluttered condition; the clearance merely served the subsequent use or realization and therefore constitutes ongoing administration.
As of: May 2015
Why are research awards classified as income from employment?
Income from employment comprises all goods, whether in money or money's worth, that accrue to the taxpayer on the basis of their employment relationship. Since a habilitation enhances professional qualifications and career prospects, particularly for a professorship, it serves to secure future income. Research funding granted for this purpose is therefore professionally motivated and taxable.
As of: August 2022
Why are sinks and stoves no longer considered integral components of buildings?
The BFH has abandoned its previous case law due to changes in standard fittings practice. Today, sinks and stoves are no longer components without which a residential building would be deemed 'incomplete.' Instead, together with the other elements of the fitted kitchen, they form a separate, uniform economic asset.
As of: December 2016
Why do pet care costs qualify as a household-related service?
Household-related services are domestic activities that are typically performed by members of the household and occur on a regular basis. According to the Düsseldorf tax court, tasks such as cleaning the litter box, providing food and water, and keeping the animal occupied meet these criteria. Since the pet is part of the owner's household, there is a close link to domestic activities.
As of: April 2015
Why are civil litigation costs considered unavoidable under recent BFH case law?
The BFH has revised its case law to the effect that civil litigation costs may, in principle, qualify as unavoidable within the meaning of § 33 EStG, regardless of the subject matter of the proceedings. The reasoning is that the taxpayer can generally only enforce their rights through the courts. The FG Düsseldorf has extended this reasoning to the preceding conciliation proceedings as well.
As of: December 2013
Why does the Düsseldorf Tax Court rule that assumed parking tickets do not constitute taxable wages?
The Düsseldorf Tax Court argues that the company merely settles its own liability when paying, since the fine is imposed on the company as the vehicle owner and not on the driver. In addition, there are no recourse claims against the driver. As a result, the driver receives no monetary benefit.
As of: January 2017
Why is driving school instruction not classified as tax-exempt school and educational instruction?
The ECJ has ruled that driving school instruction does not constitute education within the meaning of Art. 132(1)(i) and (j) of the VAT Directive and therefore cannot be equated with traditional school and university instruction. Teaching driving skills is a specialised form of instruction that, on its own, does not meet the breadth and depth of general education required for a VAT exemption.
As of: August 2019
Why is Poland considered a cautionary example regarding implementation of the reporting directive?
Poland activated reporting obligations as early as 1 January 2019, introduced draconian penalties and broadened the scope of application. In addition, the individual advisor must be reported personally and provide a signature. This creates considerable uncertainty and is prompting companies to scale back their activities in Poland or to report everything as a precaution.
As of: July 2019
Why is the 6% annual interest rate considered too high?
Market interest rates have been significantly below 6% for years, making the late-payment interest appear disproportionately high by comparison. Taxpayers also argue that they are not responsible for the lengthy processing times at the tax offices, which result in substantial interest burdens.
As of: September 2016
Why does the 15% threshold not apply to tenant-caused damages?
The BFH justifies the exception on the grounds that the landlord cannot influence such damages and that the expenses are not connected to the acquisition. The prerequisite is that the tenant's culpable conduct can be proven and that the property was free of defects at the time of acquisition.
As of: December 2017