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 19 / 47
Why does the BGH see no regulatory gap justifying an emergency managing director for a GbR?
The BGH argues that, in the event the sole managing director is unavailable, § 709 (1) BGB clearly provides for joint management authority of all partners. A potential mutual blockade among the remaining partners is inherent in this statutory default rule and does not justify an analogous application of § 29 BGB.
As of: January 2015
Why are general terms and conditions limiting liability to 15 times the cleaning price invalid?
The BGH considers such a clause an unreasonable disadvantage to customers, contrary to good faith (§ 307 BGB). The cleaning price is not an appropriate measure for the potential damage to a garment and does not adequately protect the customer.
As of: July 2013
Why are company events generally not considered wages?
Company events such as Christmas parties or company outings primarily serve the employer's own operational interests, for example to foster a positive workplace atmosphere. As long as the exemption threshold of EUR 110 per person is observed, no taxable wages arise.
As of: October 2013
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 are credit notes a focus area of tax audits?
Since the formal designation 'Gutschrift' (credit note) has been mandatory since 2013, violations can easily be identified during VAT special audits or general tax audits. The tax authorities apply this requirement strictly, so formal errors can quickly lead to input VAT being denied.
As of: December 2012
Why are hotel rooms not attributed to the deemed fixed assets of a tour operator?
A tour operator's business model typically does not require long-term use of hotel rooms. The short-term nature of the transfer results in only a short-term deemed ownership position, so the assets would be classified as current assets rather than fixed assets. Tour operators must be able to respond flexibly to market changes and customer preferences.
As of: November 2019
Why is the 6% interest rate on back taxes legally contested?
Market-based reference interest rates have been significantly lower for years, in some cases near zero. As a result, a case is pending before the BFH that reviews the constitutionality and legality of the fixed interest rate of 6% p.a.
As of: February 2014
Why are export-oriented German companies particularly affected by economic developments?
German companies generate a substantial share of their revenue abroad, particularly in the Eurozone and China. An economic slowdown in these markets directly leads to declining revenues, shrinking margins, and an increased risk of insolvency.
As of: December 2014
Why can notional hourly rates for one's own care services not be claimed for tax purposes?
Extraordinary expenses under § 33 EStG require that the expenditures actually reduce the taxpayer's assets. However, no real monetary outlay arises when care services are provided personally. This also reflects the subjective net principle, which only exempts actual reductions in assets from taxation.
As of: May 2015
Why are unexploded New Year's firecrackers particularly dangerous?
Apparent duds can continue to smoulder for a considerable time and then suddenly explode. If brought into enclosed spaces, they can cause significant property damage and injure people. For this reason, they should never be picked up or carried into the house.
As of: December 2013
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 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 employees review their electronic wage tax deduction features?
The stored data (e.g. tax class, child allowances, religious affiliation) determine how much wage tax is withheld each month from gross salary. Incorrect data lead to wrong deductions and therefore to a net salary that is too low or too high. An early review helps avoid subsequent corrections and back payments.
As of: December 2012
Why should self-employed individuals build reserves for additional contribution claims?
Since the final contribution assessment is only made once the income tax notice is available, additional claims typically become due one to two years after the end of the contribution year. Rising profits can lead to substantial back payments. To avoid liquidity shortfalls, sufficient reserves should be built up early and not used for other purposes.
As of: February 2018
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 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 should worthless shares be sold before the end of 2019?
As of 1 January 2020, the draft legislation (Section 20 (2) sentence 3 EStG draft) provides that the write-off or transfer of worthless shares will no longer qualify as a sale for tax purposes. As a result, losses from such transactions can no longer be offset against gains from other capital investments from 2020 onwards. Anyone anticipating a loss in value should therefore complete the sale by 31 December 2019 at the latest in order to use the loss for tax purposes.
As of: October 2019
Why are the inheritance tax benefits for business assets under review?
The Bundesfinanzhof has once again referred German inheritance tax law to the Federal Constitutional Court for review (Az. II R 9/11). The court is expected to find the current rules unconstitutional. As a result, the tax benefits for transferring business assets could be significantly curtailed.
As of: October 2012
Why does the Fiscal Court of Cologne hold that a home office does not constitute an independent economic asset?
The Fiscal Court of Cologne argues that a home office is structurally and functionally integrated into the private living area. Due to this integration, it lacks the independence required to qualify as a separate economic asset. As a result, upon sale it cannot be treated separately as a taxable component of the overall property.
As of: June 2018
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 does the Berlin-Brandenburg Tax Court deny the deduction of income-related expenses in cases of salary conversion?
In a salary conversion, the salary component equal to the leasing instalments is never paid out to the employee in the first place. Since the employee waives this portion, there are by definition no expenses incurred from their own assets for the purpose of generating income. However, income-related expenses require the taxpayer's own expenditure.
As of: June 2016
Why does the Sanierungserlass (restructuring decree) violate the principle of the legality of administration?
The principle of legality requires that tax benefits have a statutory basis. The Sanierungserlass, however, was merely an administrative directive issued by the BMF without statutory authorization and granted equitable relief on substantive grounds across an entire category of cases. In doing so, the administration assumed a role that, according to the BFH, is reserved exclusively for the legislator.
As of: October 2017
Why does charging an admission fee for a Christmas market violate the Green Spaces Act?
Under the Green Spaces Act (Grünanlagengesetz), public green and recreational areas must generally be available to everyone free of charge for recreational use. Cordoning off such an area to charge admission fees contradicts this designated purpose and is therefore impermissible.
As of: December 2014
Why has filing a patent in the EU been so expensive until now?
Until now, patents had to be validated separately in each EU country. This caused considerable bureaucratic effort, translation costs and administrative fees in every single member state. In total, this resulted in costs of around EUR 36,000 per patent.
As of: August 2013
Why was gifting a Cash-GmbH previously possible tax-free?
Until the law was amended, bank balances and fixed-term deposits did not count as harmful administrative assets within the meaning of section 13b (2) ErbStG. If cash was held as a fixed-term deposit in a GmbH, the shares could be transferred tax-free by applying the inheritance and gift tax relief provisions for business assets. This arrangement was known as a 'Cash-GmbH'.
As of: August 2013
Why was transferring cash assets via a cash GmbH attractive from a tax perspective?
Cash gifts from private assets are generally subject to the full gift tax. However, if the cash was contributed to a GmbH and the GmbH shares were then transferred, the relief provisions for business assets could be applied, effectively allowing the transfer to be made tax-free.
As of: April 2013
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
Warum werden Preisabschläge an private Krankenversicherungen bisher anders behandelt?
Bei privat Versicherten zahlt zunächst der Patient den vollen Preis und erhält von seiner Versicherung eine Kostenerstattung. Damit endet die umsatzsteuerliche Leistungskette beim Privatpatienten, nicht bei der Versicherung. Der Abschlag, den der Pharmaunternehmer der privaten Krankenversicherung erstattet, mindert daher nach bisheriger Auffassung nicht die Bemessungsgrundlage.
As of: August 2016
Why are old contribution-acquired shares included in § 17 Abs. 6 EStG?
Since the previous version of § 21 UmwStG will no longer apply in the future, old contribution-acquired shares created through a contribution in kind must also be included in the taxation regime of § 17 Abs. 6 EStG. This ensures that such shares remain subject to taxation upon a later sale.
As of: December 2024
Why does the legislator intend to legally define the term 'initial training' from 2015 onwards?
Until now, the term 'initial training' has not been clearly defined for tax purposes, which led to numerous disputes with the tax office. With a statutory definition effective from 2015, the legislator aims to provide legal certainty and clearly determine when initial training applies and when it qualifies as secondary training. This distinction is decisive for the tax deductibility of training costs.
As of: October 2014
Why is the solidarity surcharge not being abolished entirely?
Federal Finance Minister Olaf Scholz justified retaining it by noting that the financial obligations relating to German reunification are decreasing but have not yet been completed. Since the introduction of the solidarity surcharge, the federal government has collected EUR 275 billion in revenue but has invested EUR 383 billion for purposes related to German reunification. Despite the expiry of the Solidarity Pact at the end of 2019, the Soli will therefore continue to be levied on top earners.
As of: October 2019
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 is the obligation to file for insolvency being suspended?
In the current situation, applications for public aid or financing and restructuring negotiations often cannot be completed within the statutory three-week deadline. The suspension prevents companies from having to file for insolvency solely for this reason.
As of: March 2020
Why was the levy rate for the Künstlersozialversicherung (artists' social insurance) reduced in 2017?
The reduction from 5.2% to 4.8% became possible because the financial situation of the Künstlersozialkasse had stabilized. In particular, the intensified audits of levy-liable companies by the Deutsche Rentenversicherung broadened the contribution base. This allowed individual users of artistic services to be relieved in the following year.
As of: August 2016
Why was the tax allowance for bonus benefits enshrined in law?
The income tax treatment of bonus benefits has been the subject of several rulings by Germany's highest courts. As the previously applicable administrative rule has proven effective in practice and a complex allocation with minor tax impact is to be avoided, it has now been codified in law.
As of: December 2024
Why was the child tax allowance referred to the German Federal Constitutional Court?
In its referral order of 2 December 2016 (Az. 7 K 83/16), the Lower Saxony Tax Court expressed doubts about the level of the child tax allowance (Kinderfreibetrag). The reason is that, in 2014, the legislator did not fully implement the requirements of the subsistence minimum report, leaving the child tax allowance 72 euros too low. Furthermore, it is criticised that a lower tax-free amount applies to adult children in vocational training than to adult children without training.
As of: December 2016
Why was the Mediation Committee convened on the inheritance tax reform?
On 08 July 2016, the federal states (Länder) referred the matter to the Mediation Committee because they considered the rules on tax relief for business heirs adopted by the Bundestag to be in need of revision. The aim was a fundamental overhaul of the reform.
As of: September 2016
Why was the reduced VAT rate for restaurants and food service businesses introduced?
Restaurants, cafés, and similar food service businesses have been hit especially hard by the COVID-19 crisis, in part due to official restrictions on their operations. The reduced VAT rate is intended as a kick-start measure, enabling these businesses to quickly return to operating on their own once restrictions are eased.
As of: May 2020
Why was the pro-rata loss forfeiture under § 8c Abs. 1 KStG abolished?
In its ruling of 29 March 2017, the Federal Constitutional Court held that § 8c Abs. 1 KStG was incompatible with the Basic Law for share acquisitions between 1 January 2008 and 31 December 2015. In response, the legislator initially planned to abolish the rule only for this period. On 8 November 2018, however, the Bundestag decided to repeal the provision entirely and without replacement.
As of: November 2018
Why was the deductibility of estate liabilities under limited tax liability changed?
The European Court of Justice ruled that the previous non-deductibility of compulsory portion liabilities under limited tax liability violated the free movement of capital. In response, a proportional deductibility was enacted to ensure compliance with EU law.
As of: December 2024
Why was the application deadline for the first phase extended?
Due to significant processing times and technical difficulties with the online procedure – such as delays in delivering the required PIN – the original deadline of 31 August 2020 was extended to 30 September 2020. Steuerberater associations had strongly advocated for this extension.
As of: September 2020
Why was the taxation of foreign occupational pension schemes adjusted?
Under the previous rules, foreign cases could be treated more favorably than domestic ones if contributions were tax-exempt abroad and only the income portion was taxed in Germany. The legislative clarification ensures that a comparable foreign tax exemption or preferential treatment of contributions also leads to full taxation of the subsequent pension benefits in Germany.
As of: December 2024
Why was BAFA's coronavirus consulting subsidy exhausted so quickly?
Demand far exceeded all expectations. At the same time, according to reports by the Süddeutsche Zeitung, there was a significant number of abusive and partly fraudulent applications. This overstretching of the program contributed to the funds being used up prematurely.
As of: June 2020
Why was the inheritance tax reform necessary in the first place?
In December 2014, the Federal Constitutional Court ruled that the previous inheritance tax regulations were partly unconstitutional and required the legislator to enact a new framework. The reform is intended to implement these constitutional requirements, particularly with regard to the preferential treatment of business assets.
As of: September 2016
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 rule on closing transactions amended by law?
The BFH had ruled that the previous administrative practice was not consistent with the wording of the statute. The legislative amendment now anchors this practice in law to ensure a straightforward, easy-to-apply procedure.
As of: December 2024
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
Why was the rule on cash payment for care services clarified?
The BFH had ruled that the previous wording of the law did not unambiguously prohibit cash payment for care and support services. The legislator has responded and now clarifies that non-cash payment is also a prerequisite for the tax reduction in the case of these services.
As of: December 2024
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