In its judgment of 15 July 2015 (1 K 2204/13), the Tax Court of Rhineland-Palatinate (FG) ruled that a taxpayer earning business income is obliged to submit the income tax return to the tax office in electronic form even if only minor profits (EUR 500) are generated. The claimant lives in Rhinehesse and works on a secondary basis as a self-employed photographer, author and diving instructor. In 2011, the defendant tax office informed him for the first time that, on account of this self-employed activity, he was required to transmit his income tax return to the tax office electronically. The claimant objected that the profits from his self-employed work would in future amount to only around EUR 500 per year. In addition, he refused on principle to transmit personal data via the internet, because he had already had relevant experience with internet misuse. Even with online banking, absolute security could not be guaranteed. The tax office nevertheless rejected his application for future submission of income tax returns in paper form. The claimant's objection and subsequent court action were also unsuccessful. In its reasoning, the FG stated that, under the EStG, electronic filing was mandatory if the profit exceeded EUR 410. This form of filing was also not unreasonable for the claimant. After exhausting all technical security measures, the residual risk of a hacker attack on the stored or transmitted data had to be accepted in view of the state's interest in administrative simplification and cost savings. Absolute confidentiality of data could not be guaranteed in any event, since data stored "analogously" in paper form could also be stolen — for example, in a burglary at a residence or, as reported in the media on 13 June 2015, in break-ins of bank letterboxes. Electronic tax returns were also mandatory for VAT, and in this respect the BFH had already ruled that this was constitutional despite the "NSA affair". The FG did not grant leave to appeal.
Frequently asked questions
Frequently asked questions
From what profit threshold is electronic filing of the income tax return mandatory?
Under the EStG, electronic filing of the income tax return is mandatory as soon as profits from business income (e.g. self-employment, trade or business, or agriculture and forestry) exceed 410 euros per year. Even modest profits of around 500 euros already trigger this obligation.
Can data protection concerns eliminate the obligation to file electronic tax returns?
No. The Finanzgericht Rheinland-Pfalz ruled on 15 July 2015 (1 K 2204/13) that the residual risk of a hacker attack must be accepted after all technical security measures have been exhausted, given the public interest in administrative simplification and cost savings. Absolute data security does not exist in any case, since paper records can also be stolen, for example through burglary.
When can a tax return still be filed on paper despite business income?
Paper filing is only permitted if electronic transmission is unreasonable for the taxpayer (so-called hardship application). According to case law, however, personal concerns about transmitting data via the internet or negative experiences with internet misuse are not sufficient grounds.
Does the electronic filing obligation also apply to part-time self-employment?
Yes. Anyone working on a part-time self-employed basis – for example as a photographer, author, or diving instructor – must submit their income tax return electronically, provided the profit exceeds the threshold of 410 euros. The amount of primary income from other income categories is irrelevant in this regard.
Is the obligation to file tax returns electronically constitutional?
Yes. The BFH has already ruled with respect to VAT that the obligation to file electronically is constitutional, despite incidents such as the NSA affair. This assessment is applied to income tax returns as well, so no constitutional concerns prevail in that context either.