Questions & Answers
Answers to common questions.
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Which tax class do newly married couples automatically receive from 2018 onwards?
As of 01/01/2018, all couples are automatically assigned the tax class combination IV/IV after marriage, regardless of whether both partners are employed. Since this is not always the most favorable option, the choice of tax class should be reviewed individually and changed if necessary.
As of: November 2017
Which tax class combinations can spouses or registered partners choose?
Spouses and registered partners with unlimited tax liability who are not permanently separated can choose between the combinations IV/IV and III/V for wage tax withholding. Under III/V, the higher earner receives tax class III and the lower earner tax class V. Alternatively, the factor method (IV/IV with factor) is available upon application.
As of: May 2022
Which taxes can be deferred during the Corona crisis?
Deferral applications are possible for VAT, corporate income tax, trade tax, and personal income tax. The application process is straightforward, and VAT is also taken into account.
As of: March 2020
Which tax incentives apply to electric and hybrid vehicles until 2030?
The reduced (50%) tax base for company car taxation on the private use of electric or hybrid electric vehicles will be extended to vehicles purchased or leased by 31 December 2030. The tax exemption for charging at the employer's premises and for the provision of company (electric) bicycles will also be extended.
As of: August 2019
Which distance is used to calculate the commuter allowance (Entfernungspauschale)?
The basis is generally the shortest road connection between your home and your first place of work, regardless of the means of transport. A longer route may only be used if it is more favorable in terms of traffic (saving at least 10% of travel time) and is actually used. Detours, for example to pick up passengers, are not deductible.
As of: January 2022
What electricity usage is required for eligibility?
Apart from grid feed-in, the generated electricity must be used exclusively for the owner's own residential purposes; use in a home office is not detrimental. For co-entrepreneurships, it is sufficient if at least one co-entrepreneur uses the electricity for private residential purposes. Detrimental, however, is electricity consumption by tenants generating rental income exceeding €520 in the assessment period, or use for the owner's or third parties' business purposes.
As of: January 2022
What hourly wage limit applies to social-security-exempt Sunday, holiday, and night-work bonuses (SFN)?
Under § 1 Abs. 1 SvEV, the social security exemption for Sunday, holiday, and night-work bonuses no longer applies if the calculation base exceeds €25 per hour. Only the portion above €25 is then subject to social security contributions. For mini-jobs, this threshold is rarely relevant in practice.
As of: May 2022
Which parts of the inheritance tax rules were objected to by the BVerfG?
The Federal Constitutional Court did not strike down the entire body of rules, but only objected to specific aspects of the current inheritance and gift tax provisions as unconstitutional. The fundamental framework for relief of business assets, by contrast, remained untouched.
As of: December 2014
Which workarounds in CRS information exchange are being criticised?
Critics such as the Netzwerk Steuergerechtigkeit (Tax Justice Network) fear that the exchange is being circumvented through so-called residency certificates. Very wealthy individuals could register as residents in shadow financial centres to avoid data exchange with their actual country of residence. This would create a gap in the transparency system.
As of: September 2017
What revenue loss is required for Bridging Aid III (Überbrückungshilfe III)?
Eligible applicants are companies with a revenue decline of at least 30% compared to the corresponding reference month in 2019. The additional requirements of Bridging Aid II regarding time periods and degree of impact no longer apply. Access has therefore been significantly simplified compared to the previous regulation.
As of: March 2021
Which turnover thresholds apply from 2025 onwards for the small business scheme under § 19 UStG?
Effective 1 January 2025, turnover must not exceed EUR 25,000 in the previous year and EUR 100,000 in the current year. If the prior-year threshold of EUR 25,000 is exceeded, the scheme is not available in the following year. If the EUR 100,000 threshold is exceeded during the current year, standard VAT taxation applies from that point onward.
As of: December 2024
What revenue losses are required for Überbrückungshilfe II (Bridging Aid II)?
Eligible businesses must demonstrate either a revenue decline of at least 50% in two consecutive months between April and August 2020 compared to the same months in the prior year, or an average revenue decline of at least 30% across April to August 2020 compared to the prior-year period. Reimbursement covers 40 to 90 percent of fixed costs on a sliding scale based on the revenue decline, capped at EUR 50,000 per month.
As of: November 2020
Which VAT reduction was decided in the economic stimulus package of 03/06/2020?
From 01/07/2020 to 31/12/2020, the standard VAT rate will be reduced from 19% to 16%, and the reduced rate from 7% to 5%. The reduction is temporary and forms part of the stimulus package aimed at strengthening domestic demand.
As of: June 2020
Which moving expenses are deductible as work-related expenses?
Deductible items include in particular transport costs for household goods, broker fees for a rental apartment, travel costs (30 cents per kilometer, e.g. for apartment viewings), duplicate rent payments for up to six months, and up to three months' rent for the new apartment that is not yet usable. Receipts must be retained. Not deductible, however, are purchases for new furnishings, as these are considered private living expenses.
As of: July 2019
Which moving expenses are deductible in the case of a job-related relocation?
Deductible items include transport costs for household goods (including tolls and transport insurance), travel expenses to the new place of residence as well as for apartment searches and viewings (also for an accompanying person), rent compensation in case of double rent payments, and customary local broker fees for the new apartment. In addition, other moving-related expenses such as renovation costs for the previous apartment, connection of household appliances, or apartment advertisements may be claimed.
As of: August 2021
Which documents must be submitted if the 2019 annual financial statements are not yet available?
If the 2019 annual financial statements are not yet available, the 2018 statements together with a business analysis (BWA) as of 31 December 2019 will suffice. For loan amounts up to EUR 3 million, KfW waives the submission of documents entirely and does not carry out its own risk assessment.
As of: March 2020
Which companies qualify as specialist firms for energy-related measures?
Specialist firms include skilled trade businesses from the sectors relevant to building renovation, such as bricklayers and concrete workers, plasterers, painters and varnishers, carpenters and joiners, roofers, plumbers, heating installers, electricians, metalworkers, stove and air heating installers, roller shutter and sun protection technicians, chimney sweeps, tilers, and specialised window fitters. The decisive factor is that the company operates in the field of the respective energy-related measure.
As of: April 2024
Which businesses can participate in the OSS procedure?
Businesses established in Germany that provide services to private individuals in the EU or carry out intra-Community distance sales are eligible to participate. Operators of electronic marketplaces (e.g. Amazon, eBay) through which supplies between businesses and private individuals in the EU are processed can also use the procedure. Likewise included are non-EU businesses that maintain a domestic facility such as a warehouse for dispatching goods.
As of: June 2021
Which companies are newly eligible to apply for Bridging Aid III (Überbrückungshilfe III) following the adjustments?
Eligibility now extends to companies founded up to 31 October 2020 (previously 30 April 2020), as well as companies under the sponsorship of religious communities, such as hospitals or kindergartens. This significantly broadens the range of eligible businesses.
As of: April 2021
Which companies are subject to the levy under the Künstlersozialkasse?
Classic exploiters such as publishers, press agencies, theatres, orchestras and museums are subject to the levy. The same applies to companies that use artistic or journalistic services on more than a sporadic basis (at least once per year). In addition, the general clause covers companies that organise more than three events per year involving artists or journalists, or generate revenue from such events.
As of: January 2022
Which companies are required to pay the artists' social security contribution (Künstlersozialabgabe)?
The obligation to contribute applies not only to self-employed artists and publicists themselves, but above all to companies that use and exploit the services of self-employed artists or publicists. These companies must participate in the statutory reporting procedure of the Künstlersozialkasse (Artists' Social Security Fund). Many entrepreneurs underestimate this obligation and thus risk back payments during social security audits.
As of: August 2019
Which storm damages are deductible as extraordinary expenses under § 33 EStG?
Deductible items include repair and replacement costs for the home, furniture, household goods, and clothing, as well as disposal expenses, appraisal fees, and interest on a disaster-related loan. Cars and garages do not qualify. Only the portion not covered by insurance and exceeding the reasonable burden threshold (zumutbare Belastung) can be claimed.
As of: October 2021
Which assessment types can spouses still choose from the 2013 tax year onwards?
From the 2013 assessment period onwards, spouses and registered civil partners can only choose between joint assessment (Zusammenveranlagung) and individual assessment (Einzelveranlagung). The previously available separate assessment (getrennte Veranlagung) has been abolished and was permitted for the last time for the year 2012.
As of: June 2014
What is the earnings threshold for a Minijob under § 8 Abs. 1 Nr. 1 SGB IV?
Marginal employment (Minijob) exists when the regular monthly remuneration does not exceed €450. If this threshold is exceeded, the position no longer qualifies as a Minijob and instead becomes employment subject to full social security contributions.
As of: August 2021
What simplifications apply from 2013 onwards when applying for EU funding?
Smaller amounts can now be settled on a lump-sum basis, so the same information no longer has to be entered with every application. In addition, online applications are being introduced, administrative work is reduced, and the time between the call for proposals, conclusion of the grant agreement, and payment is shortened.
As of: November 2012
Which simplification rule applies to bonus payments until 31 December 2023?
The tax authorities disregard bonus payments up to a threshold of EUR 150 per year, even if they relate to basic health insurance benefits. If the bonus payment exceeds this amount, the excess must generally be deducted from special expenses (Sonderausgaben) as a contribution refund. However, the taxpayer may provide proof that the excess amount does not relate to basic benefits either and therefore has no tax effect.
As of: March 2023
Which comparative data may be used to verify the customary local rental period?
According to the BFH ruling of 26.05.2020 (IX R 33/19), official comparative data may also be used even if they are not publicly published but only made available upon request. In addition, occupancy rates can serve as a comparative benchmark.
As of: January 2021
What asset and income limits apply to the recipient of the maintenance payments?
The recipient's assets must not exceed €15,500; otherwise, the deduction as an extraordinary expense is excluded. A reasonable residential property and items of personal value are not counted. The recipient's own income and earnings exceeding €624 per year reduce the deductible maximum amount; in addition, a lump-sum allowance of €180 is deducted.
As of: April 2021
What shift in the tax burden does the OECD recommend?
The OECD recommends reducing the tax burden on income and instead taxing wealth and consumption more heavily. According to the OECD, wealth-related taxes have so far played only a minor role in Germany.
As of: December 2014
Which disposals are covered by § 16 EStG?
§ 16 EStG covers the sale of an entire business or a separate division (Abs. 1 Nr. 1), the sale of a co-entrepreneur's interest in a partnership (Abs. 1 Nr. 2), and the sale of the entire interest of a personally liable partner in a KGaA (Abs. 1 Nr. 3). The resulting gains qualify as extraordinary income and may be taxed at a preferential rate under § 34 EStG.
As of: June 2023
What is the requirement for deducting tax liabilities as estate liabilities under Section 10 (5) No. 1 ErbStG?
Tax liabilities are only deductible to reduce the enrichment if the decedent personally fulfilled the tax-triggering event. If the tax-triggering actions are taken only by the heirs, the necessary connection to the decedent is missing, and a deduction is not permitted.
As of: October 2023
What is the requirement for the SIM card to qualify for the tax exemption under § 3 Nr. 45 EStG?
The tax exemption only applies if the SIM card provided by the employer is used in a company-owned device. If the SIM card is used in the employee's private device, the tax exemption under § 3 Nr. 45 EStG does not apply.
As of: February 2023
What is the requirement for the tax exemption of the 1,500 EUR Corona special payment?
The special payment must be granted in addition to the wages already owed. Converting previously agreed salary or wage components into a tax-free Corona allowance is not permitted. The benefit may be provided as a cash payment or as a benefit in kind.
As of: May 2020
What is the requirement for declining-balance depreciation after the special depreciation period ends?
Declining-balance depreciation on the residual value after expiry of the special depreciation is only permitted if the asset was already depreciated using the declining-balance method before. If this was not the case, this flexible follow-up depreciation is not available.
As of: December 2024
What condition must be met for parents to deduct their child's health and long-term care insurance contributions?
Parents must have actually reimbursed the contributions to the child in cash or paid them directly. A purely notional offset against in-kind maintenance is not sufficient. We recommend documenting the actual payment or reimbursement in a verifiable manner.
As of: September 2019
What requirement must be met for medication costs to be recognized for tax purposes?
Recognition as an extraordinary expense (außergewöhnliche Belastung) requires a medical prescription. This should be obtained before purchasing the medication, even for over-the-counter products. Medications bought for a home medicine cabinet without a prescription are not recognized by the tax office.
As of: September 2013
What condition must be met for the recipient of the service to become the tax debtor under § 13b UStG?
The recipient owes VAT on construction services under § 13b Abs. 2 S. 2 UStG only if they themselves use the construction service received to provide a construction service. According to BFH case law, merely qualifying as a construction contractor or using the service for supplies of real property is not sufficient.
As of: December 2013
What condition must be met so that no inflow of wages occurs?
The employee must not have an option to alternatively receive the buy-out amount as a payment to themselves. Only if the payment flows exclusively between the former and the new debtor (e.g. two GmbHs) does the transaction remain neutral for wage tax purposes.
As of: November 2016
What is the prerequisite for the VAT exemption under § 4 No. 14 d UStG?
The exemption applies only if the cost-sharing association provides its services directly to its members. If services are also rendered to third parties, the exemption does not apply to that extent. This restricts the benefit to the purpose of sharing costs among the members.
As of: April 2016
What are the general requirements for child benefit during vocational training?
Under § 32 Abs. 4 S. 1 Nr. 2 a EStG, the child must be preparing seriously and consistently for their career goals. A mere training relationship is not sufficient; actual training measures must be undertaken. An exception applies only in cases of illness-related interruption, provided the training position and the intent to continue training remain in place.
As of: May 2022
What are the general requirements for deducting pre-acquisition income-related expenses (vorweggenommene Werbungskosten)?
Under § 9 Abs. 1 S. 1 EStG, expenses incurred to acquire, secure, and maintain income are deductible as Werbungskosten. Pre-acquisition expenses are likewise deductible, provided there is a sufficient factual and temporal connection to the later income.
As of: October 2023
What are the general requirements for deducting building renovation costs?
There must be an unavoidable event, such as a concrete health hazard or the imminent uninhabitability of the building. The expense must have arisen unavoidably, and the taxpayer must not leave any claims for compensation against third parties unused. The reasonable personal contribution under § 33 EStG is offset against the recognized expenses.
As of: May 2012
What are the requirements for the relief amount for single parents under § 24b EStG?
The taxpayer must be a single parent, be entitled to child benefit or the child allowance, and the child must belong to their household. Single parent status means that no spousal splitting is available and no other adult lives in the household. Exceptions apply to adults for whom child benefit is received.
As of: December 2021
What are the requirements for the care lump-sum allowance (Pflege-Pauschbetrag)?
The requirement is that the taxpayer provides home-based care for the affected person. In addition, the caregiver must not receive any income for their care services. The former requirement that the person being cared for must be classified as helpless no longer applies.
As of: August 2020
What are the requirements for the reduced tax rate under § 34 Abs. 3 EStG?
The taxpayer must have reached the age of 55 or be permanently incapacitated for work within the meaning of social security law. In addition, the capital gain must not exceed EUR 5 million. The relief can only be claimed once in a lifetime and requires a formal application.
As of: June 2023
What requirements apply to the suspension of the obligation to file for insolvency?
The grounds for insolvency must result from the effects of the COVID-19 pandemic. In addition, there must be well-founded prospects of restructuring, based either on an application for public aid or on serious financing or restructuring negotiations.
As of: March 2020
What requirements apply to the special depreciation under § 7b EStG?
The apartment must be located in the EU or an equivalent state, be newly built, and meet the requirements of § 181 Abs. 9 BewG (including a self-contained unit with its own entrance, kitchen, bathroom, and at least 23 sqm of living space). It must also be rented out for residential purposes on a paid basis in the year of acquisition/construction and the following nine years. For building applications from 2023 onwards, the Effizienzhaus-40 standard with a sustainability class is additionally required.
As of: March 2023
What are the requirements for the simplification rule under Section 25b of the German VAT Act (UStG)?
The supply must be preceded by an intra-Community acquisition, and the first customer must not be established in the country of destination. The first customer must use a VAT ID number of a Member State other than the country of departure or destination vis-à-vis both the first supplier and the final customer. Furthermore, VAT must not be shown separately; the invoice must refer to the triangular transaction and the reverse charge of tax liability and must include the VAT ID numbers of both the first and the final customer.
As of: February 2024
What requirements apply to the tax-privileged transfer of group shares under § 19a EStG?
The thresholds of § 19a Abs. 3 EStG must not be exceeded with respect to the totality of all group companies. In addition, the formation of none of the group companies may date back more than 20 years.
As of: December 2024
What are the requirements for restructuring proceedings under the StaRuG?
The prerequisite is imminent insolvency of the company within the next 24 months. If this applies, an application can be filed with the competent restructuring court. Until the court issues its decision, the obligation to file for insolvency is suspended.
As of: April 2021