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 25 / 47
Which expenses justify an allowance on the income tax card (Lohnsteuerkarte)?
Eligible items include in particular substantial work-related expenses such as commuting costs, travel expenses for occupational commuters, dual household expenses, work equipment, work clothing or training costs. Maintenance payments to a divorced spouse may also be taken into account. Registering an allowance is therefore especially attractive for employees with regularly high deductible expenses.
As of: February 2014
Which expenses are typically affected in usufruct transfers?
Affected items are primarily depreciation (AfA) and financing interest incurred by the new owner for the transferred property. During the term of a reserved usufruct, these expenses generally cannot be claimed for tax purposes by either the usufructuary or the new owner, unless an exception applies.
As of: October 2023
Which expenses are excluded from acquisition-related production costs?
Excluded are expenses for building extensions such as additions or attic conversions pursuant to § 255 Abs. 2 S. 1 HGB, as well as recurring annual maintenance work (§ 6 Abs. 1 Nr. 1a S. 2 EStG). Also excluded are costs incurred before the acquisition of the building (BFH, decision of 28.4.2020, IX B 121/19).
As of: June 2023
Which specific expenses were at issue in the case before the FG Düsseldorf?
The dispute concerned attorney's fees and expert witness costs incurred in connection with a conciliation proceeding before the Schlichtungsstelle Bergschaden NRW (Mining Damage Conciliation Board NRW). As the owner of a two-family house located in a former mining area, the plaintiff had asserted damage claims against the mining company and reached a settlement in the conciliation proceeding.
As of: December 2013
Which expenses are added back under Section 8 No. 1 lit. e GewStG?
Half of the rental and lease payments (including leasing installments) for the use of immovable fixed assets owned by a third party must be added back. A prerequisite is that the expenses were previously recognized as business expenses reducing profit. In total, one quarter of the sum of all add-back items under Section 8 No. 1 GewStG is added to trade income, taking into account the allowance of EUR 200,000.
As of: July 2022
What record-keeping obligations apply to gifts to business associates?
Gifts to business associates must be recorded individually and separately from other business expenses. In addition, the recipient must be documented by name. If this record-keeping obligation is breached, the business expense deduction is lost even if the EUR 35 limit is observed.
As of: July 2013
Which record-keeping obligations are eliminated under the GwG rule?
Low-value assets that are written off immediately do not need to be tracked in a separate fixed asset register. With the threshold raised to EUR 800, these record-keeping obligations no longer apply to significantly more assets, which primarily relieves mid-sized businesses and skilled trades.
As of: March 2017
What recordkeeping requirements apply to promotional gifts such as calendars?
Gifts to business associates must be recorded individually and separately from other business expenses (§4 Abs. 7 EStG). If this obligation is breached, the business expense deduction is denied even when the 40-euro threshold is observed. In the case decided, the deduction of roughly 175,000 euros failed precisely because of this missing separate recordkeeping.
As of: July 2016
Which expenses are eligible for funding under the Sonderprogramm Digitaler Einzelhandel NRW (Special Programme for Digital Retail NRW)?
Eligible expenses include consulting services for the initial implementation or expansion of digital technologies in retail. In addition, project-related material expenses can also be subsidised.
As of: July 2020
Which grounds for exclusion bar a voluntary disclosure with exemption from prosecution?
A voluntary disclosure is no longer possible once an audit order has been announced, the offender has been notified of the initiation of criminal or administrative fine proceedings, an official has appeared for a tax audit, or the offense has already been wholly or partially discovered and the offender knew this or had to expect it. It is to be newly clarified that VAT and wage tax inspections (Umsatzsteuer- und Lohnsteuer-Nachschau) also trigger such a blocking effect.
As of: July 2014
What impact does the BFH ruling X R 26/13 of 17 February 2016 have on the deduction of home office expenses?
The BFH clarified that proportional expenses for mixed-use ancillary rooms cannot be claimed in addition to the home office. Only costs for rooms that themselves meet the requirements of a domestic home office are deductible. A flat-rate inclusion of bathroom, kitchen, or hallway is ruled out.
As of: June 2016
What impact does the BFH ruling have on the previous administrative interpretation?
The ruling contradicts the previous position of the tax authorities in the BMF letter dated 24 October 2014 (BStBl I 2014, 1412 marginal no. 104), under which furnishing and household costs were attributed to the only limitedly deductible accommodation costs. Taxpayers can now rely on the more favourable BFH case law and claim furnishing costs in addition to the EUR 1,000 cap.
As of: June 2019
How does the 2022 Tax Relief Act (Steuerentlastungsgesetz 2022) affect the choice of tax class?
Among other measures, the Steuerentlastungsgesetz 2022 raised the employee lump-sum allowance (Arbeitnehmer-Pauschbetrag) to €1,200. This change has been incorporated into the updated 2022 guidance on choosing a tax class and into the BMF comparison tables, so that the most favorable tax class combinations now reflect the new allowances.
As of: May 2022
What impact does § 3 Nr. 72 EStG have on investment deduction amounts (IAB) already formed under § 7g EStG?
For fiscal years ending after 31 December 2021, forming an IAB for tax-privileged PV systems is no longer possible, as no profit is to be determined. IABs formed before 1 January 2022 and not yet added back by 31 December 2021 must be reversed pursuant to § 7g Abs. 3 EStG if the investment was made in a tax-privileged PV system. An IAB remains permissible only in businesses whose purpose is not solely the generation of electricity from PV systems.
As of: August 2023
What effects can the add-back have on loss-making companies?
In the case decided by the BFH, a hotel GmbH had generated operating losses. Only through the add-back of interest on debt, lease payments and licence fees did a trade income of approximately EUR 9.6 million arise, resulting in a trade tax base amount of EUR 62k. Loss-making businesses can therefore bear substantial trade tax burdens despite negative results.
As of: November 2012
Which BFH case law is overridden by the Annual Tax Act 2019 (Jahressteuergesetz 2019)?
Two taxpayer-friendly rulings are particularly affected: the BFH judgment of 12 June 2018 (VIII R 32/16), under which even the sale of worthless shares qualifies as a tax-relevant disposal regardless of the amount of consideration, and the judgment of 12 January 2016 (IX R 48/14) on the recognition of losses from the lapse of options. Both principles are to be statutorily inapplicable from 1 January 2020.
As of: October 2019
Which construction cost and assessment base limits apply to the special depreciation under § 7b EStG?
For building applications filed between 01/09/2018 and 31/12/2021, acquisition/production costs may not exceed EUR 3,000/sqm, with the assessment base capped at EUR 2,000/sqm. For applications filed between 01/01/2023 and 31/12/2026, the construction cost ceiling is EUR 4,800/sqm and the assessment base is capped at EUR 2,500/sqm. If costs exceed the ceiling, the incentive is forfeited; if they only exceed the assessment limit, the capped amount applies.
As of: March 2023
What significance do the venue and timing of the celebration have for the deduction of work-related expenses?
If the celebration takes place on the employer's premises and occurs wholly or partly during regular working hours, this is a strong indicator of professional motivation. These circumstances clearly distinguish a work anniversary celebration from a private birthday party.
As of: November 2016
What is the significance of the official flat-rate amounts for withdrawals of goods?
The flat-rate amounts published annually in a BMF circular are based on empirical data and serve as guidance for estimating withdrawals of goods pursuant to § 162 Abs. 2 Satz 2 AO. They apply when the taxpayer does not keep separate records of goods withdrawn. While they eliminate the need for itemized records, they are not a rigid upper limit.
As of: August 2022
What is the practical significance of the BFH ruling V R 18/17 for input VAT deduction?
The ruling makes it easier for businesses to claim input VAT deduction, as the tax authorities may no longer challenge every missing explicit statement of the date of supply. The BFH interprets the formal invoice requirements more generously in favor of taxpayers. This reduces the risk of input VAT deduction being denied on purely formal grounds.
As of: June 2018
What is the significance of the BFH ruling of 12 May 2016 beyond the individual case?
The decision has general relevance: sellers generally cannot reduce the once-assessed real estate transfer tax if the buyer becomes insolvent and the purchase price remains wholly or partly uncollectible. For real estate transfer tax purposes, the economic risk of bad debt thus rests with the seller.
As of: October 2016
What is the significance of the BFH ruling of 16 December 2015 (IV R 24/13) for authorized automobile dealers?
The BFH confirmed that authorized automobile dealers hosting amateur golf tournaments for clients cannot deduct the related expenses as business expenses. Reclassification as sponsoring or advertising costs is not permitted. The expenses are fully subject to the deduction prohibition under § 4 Abs. 5 S. 1 Nr. 4 EStG.
As of: August 2016
What is the significance of the BGH ruling for compensation claims of injured cyclists?
Injured cyclists do not have to accept a reduction in their claims, even in cases of severe head injuries, simply because they were not wearing a helmet, provided the accident was caused by a third party. Claims for damages and pain and suffering therefore remain fully enforceable.
As of: June 2014
What is the significance of the German Federal Constitutional Court proceedings 1 BvL 21/12 for pending inheritance tax assessments?
Since the BFH has referred the provisions of the ErbStG (Inheritance Tax Act), which it considers unconstitutional, to the Federal Constitutional Court for review, heirs generally have the option of obtaining interim legal protection against inheritance tax assessments. Pending the Federal Constitutional Court's decision, enforcement may be suspended or lifted where there is a legitimate interest.
As of: December 2013
What is the significance of the look-through prohibition for the extended trade tax reduction?
The look-through prohibition prevents the taxation of the holding corporation from being based on the circumstances of its shareholder. As a result, a reverse business split (umgekehrte Betriebsaufspaltung) cannot lead to genuinely commercial activity of the holding company. The extended trade tax reduction therefore remains applicable.
As of: June 2024
What is the significance of the LAG Köln ruling of 10 January 2013 for employers operating shift systems?
The ruling (Az. 7 Sa 766/12) clarifies that part-time requests must generally be accommodated even in three-shift production operations. Employers are required to examine whether organisational adjustments can enable part-time employment, rather than rejecting such requests outright. A refusal is legally sound only where demonstrably significant operational disadvantages exist.
As of: August 2013
What is the significance of the OLG Hamm ruling of 4 November 2013 for eBay sellers?
The ruling (Az. 2 U 94/13) protects sellers from the consequences of inadvertently flawed auction listings, for example when the minimum price was forgotten. Sellers may withdraw the offer without being liable for damages or delivery to a bargain hunter, provided there is a valid cancellation reason under the eBay terms and conditions.
As of: January 2014
What is the significance of Basel II ratings for medium-sized enterprises?
Basel II requires banks to link lending decisions to the borrower's creditworthiness, which is assessed through a rating. For medium-sized enterprises, this means that loan terms and, in some cases, credit availability depend directly on the rating classification. Systematic reporting and open communication with the bank are therefore key levers.
As of: April 2005
What is the significance of the BFH ruling for the pending decision of the Federal Constitutional Court?
The BFH ruling does not anticipate the decision of the Federal Constitutional Court. However, it can be taken as an indication that the BVerfG is also likely to consider the add-back provisions as constitutional. Taxpayers should continue to keep affected assessments open until the BVerfG has issued its final decision.
As of: November 2012
What is the significance of CRS data exchange in combating tax evasion?
The automatic exchange of information is considered a milestone in the fight against international tax evasion, as financial account data is systematically shared between countries for the first time. It is to be expected that this will also reveal accounts and income previously unknown to the German tax authorities. However, how effective the exchange actually is depends on consistent implementation and the closing of loopholes.
As of: September 2017
What is the significance of the average supplementary contribution in the statutory health insurance system?
The average supplementary contribution serves as the basis for the tax-funded social compensation mechanism. It is announced annually by the Federal Ministry of Health and is determined by the difference between the projected total expenditures of the statutory health insurance funds and the revenues from the Health Fund.
As of: December 2013
What is the significance of the EUR 110 threshold for input VAT deduction?
If benefits per participant including VAT remain at no more than EUR 110, the tax authorities treat them as customary and predominantly business-related, allowing the input VAT deduction. If the threshold is exceeded, an exclusively private benefit for the employees is assumed and the input VAT deduction is denied in full. A further requirement is that no more than two company events are held per year.
As of: August 2023
What is the practical significance of the 20% threshold?
If the financial assets, reduced by business debts, remain below 20% of the company value, the tax exemption for business assets is preserved. If the threshold is exceeded, the surplus is treated as harmful administrative assets and is not transferred under the preferential regime. Forward-looking liquidity planning within the company is therefore essential prior to gifts or in the event of inheritance.
As of: August 2013
What is the significance of the Focus Money Top Tax Advisor award?
Each year, Focus Money recognises tax consultancies as Top Tax Advisors based on defined quality criteria. The award serves as guidance for clients when selecting a qualified advisor. It evaluates, among other things, service quality, firm organisation, and professional expertise.
As of: August 2009
What is the significance of property tax for German municipalities?
Property tax (Grundsteuer) is one of the most important sources of revenue for municipalities, generating around EUR 13 billion annually. Any finding of unconstitutionality would therefore have a significant impact on municipal budgets and would necessitate legislative reform.
As of: March 2018
What role does the composition of guests play in the tax assessment of a celebration?
The composition of guests is a key indicator: if only a personal selection of colleagues is invited and private guests predominate, this suggests a private occasion. By contrast, if all colleagues or an objectively defined group (e.g. by function) are invited, a professional occasion is more likely to be assumed.
As of: April 2015
What is the tax significance of allocating the purchase price between land and building?
The allocation is decisive for the amount of depreciation, as only the building portion is depreciable and can be claimed as income-related expenses or business expenses via AfA (depreciation for wear and tear). A higher building portion results in a higher AfA volume and therefore a lower tax burden.
As of: January 2023
What is the significance of this rule for tax audits involving non-cash gifts?
If the option to apply flat-rate taxation under § 37b EStG has not been exercised, the simplification creates legal certainty. For gifts of up to EUR 40, the tax authorities are no longer required to issue control notifications, meaning such transactions remain uncritical during tax audits.
As of: August 2013
What is the significance of the six-month threshold for child benefits in cases of ill trainees?
The six-month threshold is the decisive criterion distinguishing child benefits granted on grounds of vocational training from those granted on grounds of disability. If the projected duration of the illness does not exceed six months, the child retains trainee status. If, according to the medical prognosis, the illness is expected to last longer, entitlement is only possible under the disability provisions.
As of: May 2022
What is the significance of distinguishing between commission for new business and portfolio maintenance fees when forming provisions?
Commission for new business is paid for newly brokered contracts, whereas portfolio maintenance fees are paid for existing contracts. The payment of a portfolio maintenance fee does not automatically entail a concrete obligation to provide follow-up service. What matters is solely whether there is a substantively defined and legally enforceable obligation to provide ongoing client support.
As of: December 2016
What role does looking at the display play in assessing prohibited mobile phone use?
A glance at the display can make the decisive difference, as it establishes a link to the device's functionality and may therefore qualify as use. Without looking at the display and without preparing one's own communication process, the OLG Köln has held that there is no prohibited use.
As of: December 2014
What is the significance of § 2 Abs. 5 GewStG when leasing a commercial business?
Under § 2 Abs. 5 GewStG, the lease of essential operating assets is treated as a cessation of the business by the former operator and as a new establishment by the lessee. This therefore constitutes a deemed new business formation. As a consequence of this fiction, the lessee participates in commercial activity from the start of the lease.
As of: February 2022
Which authority is actually responsible for tax refunds?
Refunds of overpaid taxes are handled by the locally competent Finanzamt (tax office), not by the Bundeszentralamt für Steuern (Federal Central Tax Office). Communication takes place by postal mail through official tax assessment notices, not via email.
As of: May 2015
Which areas of a firm can be certified under ISO 9001?
In principle, all service areas can be certified, including tax advisory, legal advisory, and training or academy divisions. The respective scope is stated in the certificate and defines which activities are covered by the audited quality standards.
As of: October 2016
What is the official job title under the new Emergency Paramedic Act (Notfallsanitätergesetz)?
The previous title Rettungsassistent/Rettungsassistentin (Paramedic Assistant) has been replaced by the new job title Notfallsanitäter/Notfallsanitäterin (Emergency Paramedic). This change involves an extended training period and higher professional qualification requirements.
As of: December 2013
Which employees are not included in the payroll total?
Excluded are employees on maternity leave, apprentices, long-term sick employees receiving sick pay, employees receiving parental allowance, and seasonal workers. These individuals are also not counted when determining the number of employees. Marginally employed workers, by contrast, count both toward the employee headcount and the payroll total.
As of: October 2016
What special rules apply to the deferral of inheritance tax for real estate in third countries?
For real property located in third countries, deferral is only granted if tax information exchange and the collection of claims with that state are ensured. If either requirement ceases to apply, the deferral ends immediately. The BMF is expected to publish a regularly updated list of qualifying countries.
As of: December 2024
What visitation rule applies during multi-year studies abroad for child benefit eligibility?
During a multi-year stay abroad, the child must spend the majority of the training-free periods (e.g., semester breaks) — more than half of that time — at the parents' domestic residence. The relevant assessment period is generally one academic or training year. If this threshold is not met, the domestic residence is deemed abandoned.
As of: October 2023
Which areas of the balance sheet are particularly important for improving a rating?
As part of balance sheet policy, four key areas should be optimized: strengthening equity, increasing earnings power, reducing debt, and ensuring liquidity. These levers directly impact the rating metrics derived by banks.
As of: August 2019
Which areas of the balance sheet should be the focus for improving the rating?
Key levers are increasing equity, boosting earning power, reducing debt, and securing liquidity. Forward-looking balance sheet management in these areas has a direct impact on the rating metrics used by banks.
As of: December 2020