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 35 / 47
Which VAT rate applies to advance payments when the service is performed at a later date?
The decisive VAT rate is always the one applicable at the time the service is rendered, not when the advance payment is made. If advance payments were invoiced at 19% before 01.07.2020 but the service was performed between 01.07. and 31.12.2020, the reduced rate of 16% applies retroactively. The advance invoices do not need to be corrected; the adjustment is made in the final invoice.
As of: July 2020
Which VAT rate applies to annual passes, subscriptions and membership fees (e.g. gym)?
Annual passes and subscriptions are treated as a single supply that is only deemed performed at the end of the term; they are not split into monthly partial supplies. The decisive VAT rate is the one in force at the end of the supply period. A gym subscription paid in February 2020 is therefore subject to the 19% rate again at the end of January 2021.
As of: July 2020
Which VAT rate applies to restaurant and catering services from 01/01/2021?
From 01/01/2021 to 30/06/2021, food provided as part of restaurant and catering services is subject to the reduced VAT rate of 7%. Beverages are once again subject to the standard rate of 19%. From 01/07/2021, food served for on-site consumption is again subject to the standard rate of 19%.
As of: December 2020
Which reference date is decisive for allocating the acquisition costs of real property?
According to the FG Münster, the decisive date is the day on which possession, benefits, risk, and encumbrances are transferred. For real property, this generally corresponds to the date of actual delivery, not the date of notarization or any earlier oral agreement.
As of: January 2023
What amount in dispute applies to unauthorized image use on eBay?
The Higher Regional Court of Cologne has ruled that in injunction proceedings concerning the unauthorized use of a third party's photo by private or small commercial eBay sellers, an amount in dispute of EUR 3,000 is appropriate. The previous standard amount of EUR 6,000 is no longer up to date given the increased importance of the internet as a marketplace. Nevertheless, the legal violation remains significant.
As of: September 2012
Which text should be used as the notice on online dispute resolution?
The following wording is recommended: "Information on online dispute resolution: The EU Commission provides an internet platform for the online resolution of disputes. This platform serves as a point of contact for the out-of-court settlement of disputes arising from contractual obligations under online sales contracts. The platform is accessible at the following link: http://ec.europa.eu/consumers/odr."
As of: January 2016
Which VAT rate applies to restaurant meals from 1 July 2020?
From 1 July 2020 to 30 June 2021, a reduced VAT rate of 7% applies to meals served in restaurants. This measure was adopted as part of the relief package addressing the COVID-19 crisis. Once the time limit expires, the standard VAT rate would generally apply again.
As of: May 2020
Which VAT rate applies to continuous services such as rental agreements during the transition period?
Continuous services are generally deemed performed at the end of the agreed service period, i.e. at month-end for monthly rents. If the service is rendered before 01.07.2020, the rates of 19% or 7% apply; for later performance (until 31.12.2020), 16% or 5% apply. Contracts that serve as invoices (containing all mandatory details) must be amended by an addendum reflecting the changed tax rate.
As of: July 2020
Which VAT rate applies to cafeteria sales in care facilities?
Cafeteria sales in a care facility are generally subject to the standard VAT rate of 19%. A VAT exemption does not apply, and the reduced rate only applies if the respective requirements (e.g. take-away sales) are met.
As of: November 2023
Which VAT rate applies to photo books?
Supplies and intra-Community acquisitions of photo books are subject to the standard VAT rate of 19% pursuant to § 12 Abs. 1 UStG. The reduced rate under § 12 Abs. 2 Nr. 1 in conjunction with Nr. 49 Buchst. a of Annex 2 to the UStG does not apply, as photo books do not qualify as preferentially treated books for VAT purposes.
As of: May 2016
Which VAT rate applies to breakfast services for hotel guests?
Breakfast services provided to hotel guests are subject to the standard VAT rate of 19%. The reduced rate of 7% does not apply to breakfast, even if it is offered as part of a package together with the overnight stay.
As of: December 2013
Which VAT rate applies to restaurant and catering services until 30 June 2021?
From 1 July 2020 to 30 June 2021, the VAT rate for meals served in restaurants, snack bars, food retail, catering, bakeries and butchers was reduced from 19% to 7% (and even to 5% from 1 July to 31 December 2020). The reduced rate applies only to ready-to-eat prepared food. Beverages are excluded; for combined offerings, the BMF permits a flat allocation of 70% food and 30% beverages.
As of: December 2020
Which VAT rate applies to food in the hospitality sector from 1 July 2020?
For food served in the hospitality sector, the VAT rate is reduced from the standard rate of 19% to the reduced rate of 7%. This provision applies from 1 July 2020 and is part of the Corona Tax Relief Act, adopted by the Federal Cabinet on 6 May 2020.
As of: May 2020
Which VAT rate applies to parking facilities used by hotel guests?
Providing parking facilities to hotel guests is subject to the standard VAT rate of 19 %. It does not qualify as a service directly related to accommodation, which would be eligible for the reduced rate of 7 %. The BFH confirmed this in its ruling of 01.03.2016 (Az. XI-R-11/14).
As of: July 2016
What is the difference when acquiring from a private development company?
When purchasing from a private development company, the developed plot itself is regularly the subject of the acquisition. In this case, the development costs form part of the assessment basis for real estate transfer tax. This contrasts with a purchase from a municipality responsible for development.
As of: December 2022
Which benchmark applies when assessing the statutory interest rate for tax purposes?
According to the BFH, the statutory interest rate must not be compared solely with investment interest rates achievable in the market. Borrowing rates payable on loans must also be taken into account. Only this combined assessment provides the basis for evaluating the constitutionality of the interest rate.
As of: September 2014
What late-filing penalty applies for delayed submission of a tax return?
If the tax return reaches the tax office after July 31, a late-filing penalty of 25 euros per month is imposed automatically. The tax office has no discretion in setting this penalty.
As of: May 2016
Which value applies under the 1% rule for a used car?
Under the 1% rule, the gross list price as new at the time of initial registration is always used, even for a used car. The actual market value or purchase price is irrelevant, even if it is significantly lower.
As of: February 2013
Which value is to be used as acquisition costs for the private sale transaction in the case of a tax-neutral withdrawal?
If the property was withdrawn from business assets on a tax-neutral basis at book value, the FG Rheinland-Pfalz and the BFH hold that this book value (withdrawal value) must be used as acquisition costs within the meaning of § 23 Abs. 3 EStG. The going-concern value (Teilwert) or fair market value at the time of withdrawal cannot be applied. As a result, the hidden reserves are only taxed upon the subsequent sale from private assets.
As of: July 2022
Which date is decisive for the 10-year period in the case of a compulsory auction?
Decisive for calculating the 10-year period under § 23 Abs. 1 Nr. 1 EStG is the submission of the highest bid. As of this date, a contractual purchase agreement within the meaning of § 433 BGB is deemed to exist. Starting from this reference date, it must be assessed whether the disposal falls within or outside the speculation period.
As of: May 2022
Which point in time is decisive for assigning the correct VAT rate?
Generally, the decisive moment is when the respective service is performed, not when payment is made or the invoice is issued. For deliveries involving shipment or transport, the start of dispatch is relevant; for other services, the point of completion applies. In the case of agreed partial services, the completion of each individual partial service is decisive.
As of: December 2020
Which period is affected by the Federal Constitutional Court's decision on Section 8c KStG?
The decision concerns loss reductions resulting from a change of shareholders in the years 2008 to 2015. For periods from 2016 onwards, it has not yet been conclusively clarified whether the new rule also applies, as the legislator has modified the legal framework in the meantime.
As of: June 2017
What is the purpose behind the three-month waiting period for child benefit (Kindergeld)?
The waiting period is intended to protect the German social system from inappropriate use and to prevent child benefit from creating an incentive to move to Germany. However, this purpose does not apply if a domestic child benefit entitlement already existed prior to relocation, for example because one parent is gainfully employed in Germany.
As of: February 2021
What uniform tax rate does the BVStB model propose for inheritance tax?
The BVStB proposes a uniform tax rate of 10%. The rationale is that a progressive tiered tariff with marginal rates of up to 50% would require an especially equality-compliant valuation, which is hardly achievable in practice. A uniform, low rate is intended to simplify the tax and make it constitutionally robust.
As of: August 2013
What flat-rate compensation are employees entitled to in the event of late wage payments?
Under § 288 Abs. 5 BGB, employees are entitled to a flat-rate default fee of EUR 40.00 if the employer pays wages late. This flat rate applies to each late payment, without any need to prove actual damages.
As of: July 2016
What economic damage threatens the performing contractor in such legacy cases?
Due to the civil-law limitation period for its claims, the performing construction contractor can typically no longer pass the subsequently assessed VAT on to its contractual partner (the property developer). As a result, the tax burden remains economically with the contractor, constituting a substantial financial loss. This aspect was a key argument for the tax court in granting interim legal protection.
As of: June 2015
What is the case reference of the BFH ruling on VAT prepayments at year-end?
The relevant landmark ruling by the BFH is dated 27 June 2018, case reference X R 44/16. It governs the temporal allocation of VAT prepayments made shortly after the turn of the year.
As of: October 2018
What is the case number of the BFH ruling on the deductibility of mixed-use ancillary rooms?
The relevant ruling by the Bundesfinanzhof (BFH) is dated 17.02.2016 and bears the case number X R 26/13. It clarifies the tax treatment of mixed-use rooms in connection with a home office.
As of: August 2016
What is the case reference of the BFH ruling on the constitutionality of late-payment interest?
The relevant ruling by the Bundesfinanzhof has the case reference IX R 31/13 and was issued on 1 July 2014. It held that the interest rate of 0.5 percent per month on back taxes does not violate the German Basic Law (Grundgesetz).
As of: September 2014
What is the case reference number of the referral proceedings on the solidarity surcharge at the Lower Saxony Tax Court?
The 7th Senate of the Lower Saxony Tax Court has suspended the proceedings under case reference 7 K 143/08. The court is referring the question of constitutionality to the Federal Constitutional Court for a decision.
As of: August 2013
What is the case number of the pending appeal before the BFH on laboratory tests?
The appeal against the ruling of the FG Niedersachsen of 03.09.2015 (Az. 16 K 340/12) is pending before the Bundesfinanzhof under case number V R 25/16. Until the BFH issues its decision, a certain degree of legal uncertainty remains in comparable cases.
As of: September 2016
Which court has ruled on the VAT exemption for cost-sharing associations?
The Tax Court of Münster (FG Münster) ruled in its decision under case number 15 K 196/11 that services provided by a cost-sharing association are only VAT-exempt when rendered to its members. An appeal against this decision has been filed with the BFH under case number V R 40/15.
As of: April 2016
Which court ruled on the entrance fee at the Schloss Charlottenburg Christmas market?
The Berlin Administrative Court (Verwaltungsgericht Berlin) ruled in expedited proceedings on 4 December 2014 that the organiser of the Christmas market in front of Schloss Charlottenburg may not charge visitors an entrance fee of three euros.
As of: December 2014
What was the total volume of the German federal government's 2020 economic stimulus package?
The stimulus and future-oriented package had a total volume of 130 billion euros. Of this, around 50 billion euros were allocated to future-oriented sectors such as the hydrogen economy, quantum technologies, and artificial intelligence.
As of: June 2020
Which law governs the extended filing deadlines for tax returns?
The extended deadlines result from the Gesetz zur Modernisierung des Besteuerungsverfahrens (Act on the Modernisation of Taxation Procedures). It introduces structural simplifications to the taxation process, with the deadline extension being one of the key practical reliefs for taxpayers.
As of: January 2017
Which year is decisive for the taxable portion of the pension?
Pursuant to § 22 No. 1 sentence 3 a) aa) EStG, the year of the actual commencement of the pension is decisive. The taxable portion applicable at that time, as set out in the statutory table, is applied to the pension. An earlier possible pension start date (e.g., upon reaching age 65) is irrelevant if the pension is in fact only drawn later.
As of: April 2023
What risk arises if driving schools provisionally treat their services as VAT-exempt?
If the BFH confirms the VAT liability, the VAT must be paid retroactively. In addition, late-payment interest of 6% per year is charged. A purely VAT-exempt treatment without safeguards is therefore not recommended.
As of: March 2016
Which ruling addresses accident insurance coverage at company parties involving alcohol?
The Hessisches Landessozialgericht addressed this issue under case number L 3 139/05. The court confirmed that statutory accident insurance generally applies at official company parties, but noted possible limitations in cases of heavy alcohol consumption.
As of: December 2016
Which proceeding is pending before the Bundesverfassungsgericht (German Federal Constitutional Court) regarding the add-backs?
The proceeding with case reference 1 BvL 8/12 is pending before the Bundesverfassungsgericht. It examines whether the add-back of rents, leases, and other interest for trade tax purposes is compatible with the Grundgesetz (German Basic Law). A ruling could have significant implications for the trade tax burden of many companies.
As of: August 2013
What conduct qualifies as unauthorised competing activity under case law?
Unauthorised competing activity exists when an employee offers services or work in the employer's market area. In the case decided, a pipe fitter privately carried out a follow-up order at a customer of the employer and collected EUR 900 in cash – the court regarded this as a serious breach of duty.
As of: March 2013
What option does the employer have when taxing promotional giveaways?
For promotional giveaways up to EUR 10, the employer may treat them as tax-free, apply regular wage taxation, or use the flat-rate taxation under § 37b EStG. According to the OFD Karlsruhe ruling of 18 December 2015, this option can be exercised separately for each individual low-value benefit in kind.
As of: August 2016
What objective justifies the extended notice periods?
The graduated scale is intended to provide enhanced protection against dismissal for long-serving and loyal employees. Since such employees are typically older, the rule indirectly favours older workers, but it is appropriate, necessary and therefore permissible.
As of: December 2014
What is the objective of raising the GwG (low-value asset) threshold?
Raising the GwG threshold primarily serves to reduce bureaucracy and ease the tax burden on SMEs and skilled trades businesses. Immediate write-off simplifies bookkeeping, as fewer assets need to be depreciated over several years and tracked in the fixed asset register.
As of: March 2017
Welches Ziel verfolgt die Bundesregierung mit der Neuregelung der Verlustverrechnung?
Ziel ist es, Beteiligungsinvestitionen attraktiver zu machen und die Rahmenbedingungen für Wagniskapital zu verbessern. Insbesondere sollen Unternehmen, die zur Finanzierung auf neue oder wechselnde Gesellschafter angewiesen sind, ihre Verluste steuerlich nutzen können. Die Maßnahme setzt das im Koalitionsvertrag vereinbarte Eckpunktepapier Wagniskapital um.
As of: September 2016
What gift tax risk arises when transferring a sole proprietorship to a family-owned GmbH?
In addition to the income tax consequences, a gift may be deemed to have occurred in the amount of the goodwill. According to recent case law, however, this gift is not treated as a transfer to the shareholder (e.g., the son), but directly to the receiving GmbH. This leads to significantly disadvantageous gift tax consequences.
As of: June 2009
Whose knowledge of a severe disability is attributed in a business transfer?
The transferor's knowledge of an employee's severe disability is attributed to the acquirer. Even if the acquirer had no information about the severe disability, they cannot rely on this lack of knowledge to circumvent the special protection against dismissal.
As of: June 2009
Who is affected by the increased additional earnings limit for pensions?
This affects recipients of an early old-age pension, meaning those who retired before reaching the regular retirement age. For regular old-age pensioners who have reached the standard retirement age, no additional earnings limit applied in any case.
As of: March 2020
Who applies for the civil servants' death benefit and who pays it out?
The application for the death benefit is filed by the heirs or surviving dependants of the deceased civil servant with the competent State Office (Landesamt). Payment is made by the respective employing public authority (Dienstherr) — in the decided case, by the State of North Rhine-Westphalia via the Landesamt.
As of: September 2021
Who is entitled to claim special depreciation on seasonal and perishable goods?
Special depreciation on seasonal and perishable goods such as clothing, fruit, or vegetables is now also available to manufacturers and wholesalers. Previously, this rule was limited to retailers.
As of: April 2021
Who is allowed to issue a special (manual) wage tax certificate?
By way of exception to the electronic transmission requirement, only employers who exclusively employ marginally employed workers in their private households may issue a special, i.e. manual, wage tax certificate. For all other employers, electronic transmission is mandatory.
As of: September 2014