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 23 / 47
What happens to final inheritance tax assessments if the BVerfG strikes down the tax benefits?
Final and no longer amendable tax assessments remain unchanged, even if the court declares the applicable law unconstitutional. The exemptions originally granted for business assets are not revoked in such cases. Therefore, completed transfers face no risk of subsequent disadvantages.
As of: August 2014
What happens to the prepayment penalty when a property sale is not taxable?
If the sale is not taxable under § 23 EStG (e.g., outside the 10-year holding period), the prepayment penalty is entirely lost for tax purposes. It can be deducted neither as income-related expenses from rental income nor as selling costs in private disposal transactions.
As of: February 2024
What are the tax consequences if bonus payments exceed EUR 150 per year?
Amounts exceeding this threshold are generally treated as a refund of contributions and reduce the special expense deduction for health insurance contributions. However, the taxpayer may provide evidence that the excess amount likewise does not constitute a refund of contributions.
As of: December 2024
What are the tax consequences if all efforts to rent out an apartment are completely discontinued?
If efforts to find a tenant are completely discontinued, the intention to generate income ceases to exist. As a result, the ongoing costs of the vacant premises can no longer be deducted as income-related expenses from rental and leasing income. Negative income will not be recognized by the tax office in such cases.
As of: February 2013
What are the tax consequences if a retailer fails to keep records of withdrawals of goods?
If the business owner does not maintain individual records of withdrawals in kind, the tax office is entitled to make an estimate pursuant to § 162 Abs. 2 Satz 2 AO. In practice, the official flat-rate amounts for withdrawals in kind applicable to the respective trade sector are regularly used. These values may be applied by the taxpayer and are generally accepted by the tax office.
As of: August 2022
What happens if VAT is shown on the invoice but the service is later deemed tax-exempt?
In this case, the driving school still owes the VAT shown on the invoice pursuant to Section 14c UStG. To avoid paying the tax, all affected invoices issued to customers would have to be corrected, which involves considerable administrative effort.
As of: March 2016
What happens if the end of the 4-day period falls on a weekend or public holiday?
If the end of the 4-day period falls on a Saturday, Sunday, or statutory public holiday, the deadline is extended to the end of the next working day. For example, if a tax assessment notice is mailed on a Tuesday and the 4th day would be a Saturday, the notice is deemed served only on the following Monday. The objection and litigation deadlines only begin to run from that day.
As of: December 2024
What happens if the legislator does not adopt new rules on Section 8c KStG?
If the legislator fails to adopt a constitutional new provision by 31 December 2018, the loss-restriction rule under Section 8c (1) KStG will be entirely void from the outset, i.e. retroactively from 2008. Any loss reductions imposed under this rule would then be wholly ineffective.
As of: June 2017
What happens if the energy price allowance was credited twice?
If a taxpayer receives the allowance both through their employer and as a reduction of the income tax prepayment for business income (e.g., from a photovoltaic system), a correction is made within the 2022 income tax assessment so that the allowance is granted only once.
As of: July 2022
What happens if the care services are not recognized as extraordinary expenses?
If the costs are not recognized as extraordinary expenses, a deduction is only possible as a household-related service under § 35a EStG. In this case, a maximum of 20% of the expenses, but no more than EUR 4,000 per year, can be deducted directly from the tax liability – considerably less favorable than treatment as extraordinary expenses.
As of: November 2016
What happens if the allocation deadline of 31 May is missed?
If the allocation deadline is missed, the photovoltaic system is deemed allocated to private assets. Input VAT deduction from the acquisition costs is then permanently excluded and cannot be claimed retroactively.
As of: May 2016
What happens if the subsidised dwelling is sold or used personally within the 10-year period?
If the paid rental use ends before the 10-year period expires, this must be reported to the tax office, and the special depreciation already granted will be revoked retroactively. In the case of a sale, no reversal applies if it can be demonstrated that the purchaser continues to rent the dwelling out for consideration. Holiday apartments, hotels and short-term lodging are generally excluded from the subsidy.
As of: March 2023
What happens if a requirement for the continuation-bound loss carryforward ceases to apply?
As soon as even one of the mandatory requirements is no longer met, the continuation-bound loss carryforward is forfeited immediately and in full. Planned changes in shareholders or business operations should therefore be reviewed for tax implications at an early stage in order to avoid jeopardizing existing loss carryforwards.
As of: December 2017
What happens if no authentication is available in the ElsterOnline portal?
Without a valid authentication certificate from the ElsterOnline portal, the electronic income tax certificate cannot be transmitted. Employers must therefore apply for the one-time certificate in good time before transmission in order to fulfill their reporting obligation.
As of: September 2014
Was plant der Gesetzgeber zur Betriebsrente?
Ein Gesetzentwurf soll die betriebliche Altersvorsorge stärken — die geplanten Punkte und die Fundstelle stehen im Beitrag. (Quelle: Deubner Recht & Steuern)
As of: December 2025
What does the German federal government plan regarding the solidarity surcharge from 2021?
According to the plans of the governing coalition, middle and lower incomes are to be relieved of the solidarity surcharge from 2021. For higher incomes, the Soli is to be continued unchanged beyond the end of the financial planning period. A complete abolition is therefore not envisaged.
As of: June 2019
What did the Federal Cabinet plan with the draft bill of 10 April 2013 regarding the cash GmbH?
The draft bill amending further tax provisions, dated 10 April 2013, was intended to prevent the circumvention of inheritance tax through cash GmbHs. The previously possible tax-free transfer of pure cash-asset GmbHs to the next generation was to be eliminated.
As of: April 2013
What does the Corona Tax Relief Act of 6 May 2020 regulate?
The Corona Tax Relief Act, adopted by the Federal Cabinet on 6 May 2020, comprises several tax relief measures. Key elements include the temporary reduction of the VAT rate for restaurant meals to 7%, along with flanking provisions designed to address the economic impact of the Corona pandemic on businesses and employees.
As of: May 2020
What does the ODR Regulation require from online shop operators?
The EU Regulation on Online Dispute Resolution in Consumer Matters (ODR Regulation) requires online traders to provide a link to a platform set up by the European Commission for out-of-court dispute resolution. The aim is to give consumers and traders engaged in cross-border e-commerce a simple way to settle disputes. The platform is available at http://ec.europa.eu/consumers/odr.
As of: January 2016
What does Section 27 (19) of the German VAT Act (UStG) regulate, and why is the provision constitutionally controversial?
Section 27 (19) UStG was introduced in July 2014 in response to BFH case law and retroactively excludes the protection of legitimate expectations for legacy cases, so that supplying entrepreneurs can be subsequently assessed for VAT. The Berlin-Brandenburg Tax Court considers this to be a potentially impermissible genuine retroactive effect, since it intervenes in tax liabilities that have already arisen. In addition, the protection of legitimate expectations under Section 176 (2) AO is undermined.
As of: June 2015
What does Section 60 HGB regulate regarding the non-compete obligation for commercial employees?
Section 60 HGB prohibits commercial employees from engaging in competing activities without the employer's consent – whether on a self-employed or employed basis. The non-compete obligation applies during the existing employment relationship and protects the employer from competition by its own staff.
As of: March 2013
What does Section 8c (1) KStG regulate regarding shell company acquisitions?
Under Section 8c (1) KStG, loss carryforwards of corporations are forfeited on a pro-rata basis if more than 25% and up to 50% of the shares are transferred to a new acquirer within a five-year period. If more than 50% of the shares are transferred, the losses are forfeited in full. The provision was originally intended to prevent abuse through the acquisition of GmbHs solely for the purpose of utilizing tax losses.
As of: June 2017
What did Section 8c (1) KStG regulate regarding the pro rata forfeiture of losses?
Section 8c (1) KStG provided that a corporation's loss carryforward was partially forfeited if more than 25% and up to 50% of the shares were transferred to a single acquirer within a five-year period. The aim was to prevent the trade in GmbH shells for the sole purpose of utilizing losses. In practice, however, the provision caused considerable hardship even in cases of unproblematic share transfers.
As of: November 2018
Was sieht der Gesetzentwurf zur Verlustverrechnung bei Körperschaften vor?
Der am 14.09.2016 vom Bundeskabinett beschlossene Gesetzentwurf regelt die steuerliche Verlustverrechnung bei Körperschaften neu und großzügiger. Verluste, die bislang bei einem Gesellschafterwechsel oder der Aufnahme neuer Gesellschafter steuerlich verfielen, sollen künftig weiterhin berücksichtigt werden können. Damit sollen steuerliche Hemmnisse bei der Kapitalausstattung von Unternehmen beseitigt werden.
As of: September 2016
What does the draft bill of 10 April 2013 propose regarding tax retention periods?
On 10 April 2013, the German Federal Cabinet adopted a draft bill aimed at shortening the statutory retention periods under tax law. The objective is to relieve citizens and businesses by reducing the effort required for archiving receipts and records.
As of: April 2013
What qualifies as a gift of appreciation (Aufmerksamkeit) for tax purposes?
Aufmerksamkeiten are non-cash gifts from the employer to employees on personal occasions (e.g. birthday, wedding, birth of a child). They are exempt from income tax and social security contributions up to a threshold of EUR 60 gross (previously EUR 40). If this threshold is exceeded, the entire amount is treated as taxable employment income.
As of: July 2013
What are operating fixtures (Betriebsvorrichtungen) for VAT purposes?
Operating fixtures (Betriebsvorrichtungen) are devices of any kind with a machine-like function that are used directly to carry on a trade or business. Examples include freight elevators, work platforms, conveyor belts, and bowling alleys. A detailed list is provided in the decree on § 68 BewG, Annexes 1 and 2.
As of: September 2023
What are tenant fit-outs and tenant conversions (Mietereinbauten and Mieterumbauten)?
Mietereinbauten and Mieterumbauten are construction measures that an authorized user (tenant) commissions in their own name and at their own expense on a third party's land or building, provided they do not merely constitute maintenance expenses. Under certain conditions, they can be capitalized and depreciated as fixed assets of the tenant, even though the building legally belongs to the landlord.
As of: July 2023
What are Runkel lanterns at the Bocholt St. Martin's parade?
Runkel lanterns are a Bocholt tradition in which fodder beets (regionally also called sugar beets, Rangasn, Rummel, Dickwurz or Räben) are carved into glowing Saint Martin's torches. Unlike a pumpkin, the beet is only partially carved and not hollowed through, so that the interior glows reddish from within. They are a characteristic feature of the Bocholt St. Martin's parade.
As of: November 2018
What qualifies as 'assets for everyday use' under German speculation tax rules?
Assets for everyday use are items that typically depreciate in value and have no significant potential for appreciation. Typical examples include used cars or household furnishings. Gains from their sale are exempt from taxation as private disposal transactions under § 23 Abs. 1 Satz 1 Nr. 2 Satz 2 EStG.
As of: January 2021
What are acquisition-related production costs for rented properties?
Expenses for repair and modernization measures incurred within three years of acquiring a property that exceed 15% of the building's acquisition costs (excluding VAT) qualify as acquisition-related production costs (anschaffungsnahe Herstellungskosten). They are not immediately deductible but instead increase the depreciation base and therefore only reduce taxable income through annual depreciation (AfA), typically at 2%.
As of: December 2017
What are acquisition-related production costs under § 6 Abs. 1 Nr. 1a EStG?
Acquisition-related production costs are expenses for repair and modernization measures carried out within three years after acquiring a building, where these expenses exceed 15 percent of the acquisition costs (excluding VAT). Such expenses are not immediately deductible but must be depreciated over the building's useful life.
As of: April 2023
What are acquisition-related production costs (anschaffungsnahe Herstellungskosten)?
Acquisition-related production costs are expenses for the repair and modernization of a building that are incurred within 3 years after acquisition and exceed 15% of the acquisition costs (net) (§ 6 Abs. 1 Nr. 1a EStG). They must be added to the production costs, capitalized, and depreciated over the useful life. An immediate deduction as income-related expenses is therefore not permitted.
As of: June 2023
What are mixed-use ancillary rooms under BFH case law?
Mixed-use ancillary rooms are rooms used both for business or professional purposes and to a substantial extent for private purposes. Typical examples include the kitchen, bathroom, and hallway. Since these rooms primarily serve private living needs, they are not tax-deductible.
As of: August 2016
What are low-value assets (geringwertige Wirtschaftsgüter, GwG)?
Low-value assets are depreciable, movable, and independently usable fixed assets whose acquisition or production costs do not exceed a specified threshold. They may be fully written off as a business expense in the year of acquisition, without being depreciated over their useful life. Typical examples include writing instruments, tablets, office supplies, office furniture, or small tools.
As of: March 2017
What are trade tax add-backs for rents, leases and interest?
When calculating trade tax (Gewerbesteuer), certain expenses such as interest, rents and leases are proportionally added back to profits, thereby increasing the tax base. As a result, companies may have to pay trade tax even when they generate little or no profit. These add-backs are governed by § 8 GewStG.
As of: August 2013
What are recurring expenses within the meaning of § 11 EStG?
Recurring expenses are payments made at regular intervals, such as rent, insurance premiums, or VAT prepayments. If they are paid within 10 days before or after the turn of the year, they are allocated for tax purposes to the year to which they economically belong, not to the year of actual payment.
As of: October 2018
What are regularly recurring income and expenses within the meaning of § 11 EStG?
Regularly recurring income and expenses are payments such as rent, lease, interest, or insurance premiums that occur at consistent intervals. If payment is made shortly (within 10 days) before or after year-end and was also due within this period, it is exceptionally allocated to the year of economic association. This follows from § 11 Abs. 1 S. 2 and Abs. 2 S. 2 EStG.
As of: February 2022
What should I do if I receive an email allegedly from the Bundesfinanzhof?
Do not follow any instructions to download a file or open attachments. The Bundesfinanzhof (Federal Fiscal Court) does not send such requests by email. Delete the message and do not respond to its content.
As of: October 2016
What should be reviewed before applying for a waiver of profit intention?
Since the rule also applies retroactively, you should check whether tax assessments from previous years are already final or whether losses from operating the system could still be claimed. Once the waiver is granted, no commercial income exists, so previously unused losses may be forfeited. A careful weighing of the simplification benefit against potential tax disadvantages is therefore advisable.
As of: January 2022
What should be clarified before starting an inventory of goods?
Before the inventory begins, the date of execution and the responsible inventory manager should be defined. Stock items must be clearly organized, and potential product groups or related items should be reviewed in advance. Thorough preparation is essential, as determining the inventory of goods accounts for the largest share of time during the inventory process.
As of: November 2023
What should employers specifically do as of 01.10.2022?
Employers should actively ask affected employees in the pay range of EUR 450.01 to 520 whether they wish to make use of the exemption option. A written notice is recommended, informing them about grandfathering protection, deadlines, and consequences. The employees' decision must be documented and implemented in payroll accounting.
As of: September 2022
What should owners consider before selling a holiday property?
Before any sale, it is essential to seek tax advice, as disposing of the property within ten years of acquisition may trigger taxation. Reviewing the holding periods and usage history at an early stage helps avoid an unexpected tax burden on the capital gain.
As of: July 2017
What should parents consider for tax purposes when providing student apartments?
Parents should note that providing an apartment to children free of charge only qualifies as owner-occupation as long as the children are eligible under § 32 EStG (generally until age 25 during their education). A sale within the ten-year speculation period should therefore take place within this timeframe in order to realize the capital gain tax-free.
As of: October 2023
What should heirs do to secure the holiday compensation claim?
Heirs should determine the deceased's outstanding leave entitlement with the former employer and assert the financial compensation claim in writing. If the employer refuses payment citing national law, heirs can proceed further by invoking ECJ case law and EU law.
As of: November 2018
What should taxpayers do if their assessment is final?
If the tax assessment is final and contains neither a reservation of review (Vorbehalt der Nachprüfung) nor a provisional notice (Vorläufigkeitsvermerk), and no appeal was filed, a subsequent recognition of home office costs is generally no longer possible. It is therefore advisable to keep future assessments open on disputed legal questions by filing a timely appeal.
As of: July 2010
What should companies do to prepare for the new documentation requirements?
Companies should adapt their internal processes, delivery documents, and confirmation templates to the new requirements in good time. We recommend company-specific templates for Gelangensbestätigungen (entry certificates) as well as clear procedures for obtaining and archiving the supporting documents in order to permanently secure the VAT exemption.
As of: October 2013
What should entrepreneurs additionally arrange in the emergency folder?
Entrepreneurs and self-employed professionals should specify which employees are authorized to make decisions in their absence, who holds which powers of attorney, and who is responsible for ongoing projects. Equally important are an organizational chart, accessibility of passwords, PINs and keys, as well as documented emergency management. This ensures the company remains operational even if the leader is unavailable.
As of: February 2021
What should affected GmbHs do to benefit from the unconstitutionality ruling?
Affected GmbHs should check whether their tax assessments for the years 2008 to 2015, in which losses were reduced due to a change in shareholders, are not yet final. An appeal should be filed against any open assessments, and existing appeals should be kept open in order to benefit from a new regulation.
As of: June 2017
What should German entrepreneurs with Dutch business partners do?
German entrepreneurs with supply and service relationships involving Dutch sole proprietors should request the new VAT ID number well before the first transaction in 2020. Otherwise, problems may arise with the EC Sales List and with the VAT exemption for intra-Community supplies.
As of: January 2020