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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What are the general tax retention periods in Germany?
Under § 147 AO, German tax law generally requires retention periods of 10 years for accounting vouchers, annual financial statements, inventories, and bookkeeping records, and 6 years for commercial and business correspondence. The periods begin at the end of the calendar year in which the documents were created.
As of: April 2013
What are the tax consequences of the elimination of commercial taint under Section 3 No. 72 EStG?
Due to the tax exemption under Section 3 No. 72 EStG, expanded by the 2022 Annual Tax Act, the partnership no longer generates commercial income from the photovoltaic system. Assets previously affected by commercial taint (e.g., rented buildings) are removed from business assets, requiring the disclosure and taxation of hidden reserves.
As of: October 2023
What are the tax consequences of classifying the educational institution as the primary place of work?
Trainees and students are treated like employees with a primary place of work. Travel expenses to the educational institution can therefore only be claimed as income-related expenses using the commuter allowance (Entfernungspauschale), not at actual cost. A deduction for accommodation and additional meal expenses under business travel rules is excluded.
As of: October 2020
What are the tax implications of feeding solar power into the public grid?
When selling the electricity, the operator generates business income under § 15 EStG. The system can be depreciated over 20 years, and input VAT on acquisition, maintenance, and repairs is recoverable; however, sales must be subjected to VAT and preliminary VAT returns must be filed. Under the small business rule pursuant to § 19 UStG, the VAT obligation does not apply.
As of: June 2021
What are the tax consequences of classification as a first place of work?
For trips between home and the first place of work, travel costs are deductible only via the commuter allowance of €0.30 per kilometer of distance. Additional meal expenses cannot be claimed in this case. If there is no first place of work, business travel rules apply, allowing €0.30 per kilometer driven plus meal allowances.
As of: July 2019
What are the tax implications of deferring retirement?
Anyone who postpones the start of their pension is subject to a higher taxable portion, as this is gradually increasing to 100% by 2040. As a result, the tax-free portion of the pension is smaller than it would be with an earlier retirement date. This tax disadvantage must be weighed against the higher pension benefits achieved through deferral.
As of: April 2023
What are the tax consequences of commercial infection of a joint medical practice?
If a joint medical practice carries out commercial activities in addition to professional services, all income is treated as commercial (so-called infection effect under § 15 Abs. 3 Nr. 1 EStG). The main consequences are trade tax liability on all income and, where applicable, an obligation to prepare a balance sheet. Classification as professional income ceases entirely.
As of: March 2017
What were the tax consequences of incorrect invoices in tax audits in the past?
Input VAT was reclaimed for the audit period and only recognized again at the time of the invoice correction. Interest of 6% per year accrued on the interim additional payment amount and was not waived even after the correction was made.
As of: April 2017
Which typical cash management errors lead to estimated additions by the tax authorities?
Common deficiencies include the absence of the operating manual and documentation of cash register settings (programming protocols), Z-numbers on daily total receipts that are not consecutively numbered, and faded, illegible thermal paper receipts. The lack of cancellation slips or records of training operations may also be challenged. Such errors jeopardize the evidentiary value of the bookkeeping.
As of: May 2014
Which typical small gifts benefit from the simplification rule?
Covered are classic tokens of appreciation such as bouquets of flowers, bottles of wine or similar small gifts that an entrepreneur presents to a client on a personal occasion such as a birthday. Provided the net value does not exceed EUR 35, the flat-rate tax does not apply to such gifts.
As of: August 2013
Which typical services provided by a cost-sharing association qualify for the VAT exemption?
Typical services include making medical facilities and equipment available, as well as providing practice premises to the members. These services are VAT-exempt under the conditions of § 4 No. 14 lit. d UStG, provided they are rendered to the members of the association and serve the direct exercise of their VAT-exempt medical treatment activities.
As of: April 2016
What different taxation applies to the transfer of cash held as private versus business assets?
A cash gift from private assets is generally subject to gift tax in full. In business assets, however, the inheritance tax relief provisions could apply, meaning the transfer was largely or even entirely tax-free – this unequal treatment was to be eliminated by the legislative amendment.
As of: April 2013
What constitutional concerns has the BFH raised regarding §§ 13a, 13b ErbStG?
In its joinder order of 5 October 2011 (II R 9/11), the BFH expressed constitutional doubts about the current relief for business assets, pointing to structuring arrangements used in practice such as the Cash-GmbH. These concerns were a key impetus for the planned revision of the relief provisions in the ErbStG.
As of: November 2012
What extended filing deadlines apply to the income tax return from assessment period 2020 onwards?
For represented cases, filing deadlines were initially extended by 6 months (assessment period 2020 until 31/08/2022, assessment period 2021 until 31/08/2023), then gradually reduced up to assessment period 2024 (30/04/2026, +2 months). For non-represented cases, a 3-month extension applies (assessment period 2020 until 31/10/2021, assessment period 2021 until 31/10/2022), which is likewise phased out step by step. From assessment period 2025 (represented cases) or assessment period 2024 (non-represented cases), the original deadlines apply again.
As of: June 2022
Which contractual clauses should be included in gifts or anticipated succession?
Contracts should contain reclaim or revocation clauses that allow the gift to be reversed. This makes it possible to respond if the inheritance and gift tax benefits later cease to apply or if material conditions change significantly. The entrepreneur thus retains flexibility without losing the current tax advantages.
As of: October 2012
Which contractual provisions were missing in the case before the Finanzgericht Münster?
The rental agreements contained no requirements ensuring that the vehicle would be used effectively for advertising purposes. They also lacked rules on whether additional advertising for other companies could be displayed or whether exclusivity was owed to the employer. As a result, the advertising effect was overshadowed by the employee relationship.
As of: February 2020
What other points does the 2016 inheritance tax reform cover beyond the relief provisions?
The agreement also includes provisions on preliminary discounts for family businesses, on the optional relief for administrative assets, and on the requirements for tax deferrals. In addition, measures to combat abuse were introduced.
As of: September 2016
Which other work-related expenses are deductible during the receipt of insolvency benefits?
The case law on the deduction of work-related expenses (Werbungskosten) applies not only to travel costs but also to other professionally motivated expenses incurred during the receipt of insolvency benefits. These include, for example, the acquisition of work equipment or depreciation on business-use assets. The prerequisite is that there is no direct economic connection to the tax-free insolvency benefits.
As of: September 2022
What economic consequences do the add-backs have for businesses?
Because the add-backs apply regardless of actual profit, companies must pay trade tax even during loss-making periods. According to the Handelsverband Deutschland (HDE), this weakens liquidity and the equity base and makes companies more vulnerable to economic crises. Sectors with high rental or lease expenses, such as retail, are particularly affected.
As of: August 2013
What additional requirements apply from 2021 onwards for the disability lump-sum allowance with a GdB below 50?
From 2021 onwards, the additional requirements under § 33b Abs. 2 EStG no longer apply. Until 2020, individuals with a GdB below 50 had to either demonstrate a statutory pension entitlement (e.g. accident pension) or have a permanent restriction of physical mobility or an occupational illness. Since 2021, all individuals with a GdB of at least 20 receive the lump-sum allowance without any further requirements.
As of: November 2021
What changes to the German Valuation Act does the 2022 Annual Tax Act bring for real estate?
The 2022 Annual Tax Act (Jahressteuergesetz 2022) aligns the German Valuation Act (Bewertungsgesetz) with the Real Estate Valuation Ordinance (ImmoWertV) of June 2021. The amendments primarily affect the income-based and asset-based valuation methods (Ertrags- und Sachwertverfahren) used for real estate appraisal. In practice, this regularly results in higher valuations for tax purposes.
As of: November 2022
What changes does the Betriebsrentenstärkungsgesetz (Company Pension Strengthening Act) 2018 bring regarding tax-free contributions?
The tax-free maximum for contributions to occupational pension schemes (betriebliche Altersversorgung) increases to up to 8 percent of the contribution assessment ceiling of the statutory pension insurance. In return, the previous additional tax exemption of 1,800 euros for contracts from 2005 onwards is abolished. Important: the social security exemption remains capped at 4 percent of the contribution assessment ceiling.
As of: November 2017
What changes apply to Überbrückungshilfe III Plus in Q4 2021?
In terms of content, there are almost no changes compared to Q3 2021. However, the restart bonus for reopening businesses is discontinued, as the federal government considers it to have served its purpose.
As of: October 2021
What changes apply in 2021 to the disability and care lump sums?
The disability lump sums (Behinderten-Pauschbetrag) are doubled and already granted from a degree of disability (GdB) of 20; additional eligibility requirements below GdB 50 no longer apply. A new disability-related travel cost lump sum is introduced: 900 euros (for mobility or visual impairments) or 4,500 euros for more severe limitations. The care lump sum (Pflege-Pauschbetrag) increases from 924 to 1,800 euros; care level 2 qualifies for 600 euros and care level 3 for 1,100 euros.
As of: December 2020
What changes are planned for midi-jobs and the transitional zone?
The upper limit of the transitional zone (sliding scale) is to be raised from €1,300 to €1,600 per month. In addition, the transitional zone between marginal and social-insurance-liable employment will be adjusted to reduce the employer's burden at the start of the sliding scale.
As of: March 2022
Which transitional deadlines applied to the initial notification to the Transparency Register?
AG, SE and KGaA had to file by 31 March 2022; GmbH, cooperatives, European cooperatives and partnerships by 30 June 2022; all other legal entities by 31 December 2022 at the latest. However, the transitional deadlines do not apply if the registration obligation already existed under the old law by 31 July 2021, or if registration is expressly required, for example in connection with bridging aid (Überbrückungshilfen).
As of: August 2021
Which transitional rules apply to the e-invoicing obligation until 2028?
From 01/01/2025 to 31/12/2026, paper invoices and electronic invoices in non-EU-compliant formats may still be issued for B2B transactions, provided the recipient agrees. In 2027, this remains possible only if the invoice issuer had an annual turnover of no more than EUR 800,000 in 2026. From 01/01/2028, the new requirements must be observed without exception.
As of: November 2023
Which new transmission obligations apply to the E-Bilanz (electronic balance sheet)?
The electronic transmission obligation will be extended to account statements, the fixed asset register, and the statement of fixed assets. It also applies to any balance sheet prepared for tax purposes, including notes, management report, audit report, and inventories. The obligation to transmit account statements applies to fiscal years beginning after 31 December 2024. The other extended obligations apply to fiscal years beginning after 31 December 2027.
As of: December 2024
Which parent is entitled to the relief amount (Entlastungsbetrag) when parents live separately?
The relief amount is granted to the parent with whom the child is registered or permanently residing. If the child resides equally with both parents, they may choose which parent receives it; if no choice is made, it goes to the parent entitled to child benefit (Kindergeld). A split between the parents is not permitted—the full amount is always granted to only one parent.
As of: February 2023
Which country has the right to tax foreign professional athletes performing in Germany?
For foreign professional athletes, the applicable double taxation treaty must first be examined to determine which country has the right to tax. Many treaties stipulate that income is taxed at the place where the activity is performed, so Germany generally has the right to tax when the athlete competes in Germany.
As of: July 2014
What impact does the rating grade have on loan terms?
A good rating grade is not only a prerequisite for obtaining credit but also determines the interest rate. At KfW as well as at local house banks, the interest rate spread between a good and a poor grade can be up to 4 percentage points.
As of: August 2019
What child bonus did families receive under the 2020 economic stimulus package?
Parents received a one-time child bonus of 300 euros per child. In addition, the tax relief amounts for single parents were doubled to ease the particular burden on these families during the coronavirus crisis.
As of: June 2020
What benefits does the Pflege-Neuausrichtungsgesetz (Care Reorientation Act) provide when selecting a nursing home?
Thanks to expanded transparency requirements, those in need of care and their relatives receive reliable information on the medical and pharmaceutical services provided by nursing facilities. This makes it easier to compare different homes and supports an informed decision when searching for a suitable facility.
As of: December 2013
What are the benefits of an ISO 9001 certification for clients?
Through ISO 9001 certification, clients gain the assurance that the firm operates according to standardized and traceable procedures. Sources of error are systematically reduced, processes are transparently documented, and responsibilities are clearly defined. This ensures a consistently high level of process quality.
As of: October 2016
What is the benefit of choosing the right tax class combination for spouses?
By optimally combining tax classes (e.g. III/V or IV/IV with factor), the monthly wage tax withheld can be reduced. The liquidity advantage thus arises during the year and not only after filing the joint income tax return. However, this does not change the final tax burden.
As of: November 2014
What period does Überbrückungshilfe III cover and by when can it be applied for?
Überbrückungshilfe III covers the funding period from November 2020 to June 2021. Applications can be submitted between 10/02/2021 and 31/08/2021 through a reviewing third party (e.g. Steuerberater (German Certified Tax Advisor)). No additional funding is available for months in which November or December assistance has already been received.
As of: March 2021
What period does Überbrückungshilfe IV cover?
Überbrückungshilfe IV (Bridging Aid IV) succeeds Überbrückungshilfe III Plus and covers the funding period from 1 January 2022 to 31 March 2022. It is aimed at companies and solo self-employed individuals who continue to be affected by the coronavirus pandemic.
As of: December 2021
What period does Überbrückungshilfe II (Bridging Aid II) cover?
The second phase of the Überbrückungshilfe covers the funding months September through December 2020. It is aimed at small and medium-sized enterprises, self-employed individuals, and non-profit organizations that have suffered revenue losses due to the coronavirus crisis.
As of: September 2020
What is the purpose of the cash book according to the BMF?
The cash book serves to document the current cash balance. It must be maintained in such a way that the target balance can be reconciled with the actual balance at any time, ensuring the so-called cash audit capability (Kassensturzfähigkeit).
As of: July 2018
What is the purpose of the Kinderfreibetrag (child tax allowance) in German tax law?
The Kinderfreibetrag is intended to safeguard the subsistence minimum of children by exempting a defined portion of the parents' income from taxation. The specific amount is determined on the basis of the so-called Existenzminimumbericht (subsistence minimum report), which is submitted every two years.
As of: December 2016
What is the purpose of the late payment flat fee for wages?
The flat fee is intended to encourage employers to pay wages on time and thereby increase the pressure to meet payment deadlines. At the same time, it provides a lump-sum compensation for the initial inconvenience suffered by the employee due to delayed payment.
As of: July 2016
What amount can be claimed for tax purposes when personally providing care for a relative?
For unpaid home care of a relative, the care lump-sum (Pflegepauschbetrag) under § 33b Abs. 6 EStG of EUR 924 per year can be claimed. This flat amount covers the typical expenses associated with care, such as hygiene products and care materials.
As of: May 2015
Welcher Fallstrick droht bei einer Schenkung an die Erben?
Bei vorweggenommener Erbfolge per Schenkung gibt es einen wichtigen Fallstrick — worauf zu achten ist, lesen Sie im Beitrag. (Quelle: Deubner Recht & Steuern)
As of: December 2025
What action should entrepreneurs planning a succession take?
As long as the current preferential treatment for business assets remains in force, planned gifts or anticipated succession arrangements should be implemented promptly. Following a potential ruling by the Bundesverfassungsgericht (Federal Constitutional Court), these tax benefits could be eliminated or reduced. Early succession planning therefore secures the tax advantages currently available.
As of: October 2012
What is the maximum deductible amount for maintenance payments as an extraordinary burden?
The maximum amount equals the basic tax-free allowance (Grundfreibetrag) for the respective calendar year (e.g., €9,408 in 2020 and €9,744 in 2021). It is increased by the recipient's health and long-term care insurance contributions assumed by the payer. If maintenance was not paid for the entire year, the tax office reduces the maximum amount pro rata for the months without payment.
As of: April 2021
Which capitalization factor applies to business valuations following the inheritance tax reform?
For inheritance tax purposes, a company's operating profit is multiplied by a maximum factor of 13.75. This capitalization factor replaces the previously much higher values and generally results in a lower tax base for inheritance tax.
As of: September 2016
What protection against termination applies to tenants with rent arrears due to Corona?
Tenants who are unable to pay their rent between 01.04. and 30.06.2020 due to Corona enjoy special protection. Landlords may not terminate their leases on the basis of these rent arrears until 30.09.2022. However, the rent remains owed and must be paid in arrears at a later date.
As of: March 2020
Which flat-rate allowance is being introduced for professional drivers?
Employees whose work takes place predominantly in motor vehicles can in future claim a flat-rate allowance of EUR 8 per calendar day. This can be applied instead of the actual expenses; if the actual costs are higher, these may be claimed instead.
As of: August 2019
What were the facts underlying the BFH decision of 21 July 2016 (IV R 26/14)?
A commercially characterized GmbH & Co. KG held an interest in a purely asset-managing GbR that owned a property. The KG claimed the extended trade tax deduction for real estate under § 9 Nr. 1 S. 2 GewStG. The tax office denied the deduction, arguing that an interest in a partnership is not equivalent to owning real property directly.
As of: November 2016
What were the facts underlying the OLG decision on bicycle helmets?
The owner of a car parked at the side of the road opened the driver's door directly in front of an approaching cyclist. Unable to swerve, the cyclist collided with the door, fell onto the back of her head, and sustained severe head and brain injuries. Despite the driver's fault, the cyclist was found to be contributorily negligent for not wearing a helmet.
As of: September 2013