Altehoefer – Internationale Steuerberatung

According to a ruling by the Federal Finance Court (BFH), the existing restriction on offsetting losses from futures transactions violates the principle of equality under Article 3 paragraph 1 of the Basic Law. The judges see this as a double unequal treatment of taxpayers, which is not compatible with the constitution. The main proceedings in this case are still pending. In November 2020, the BFH had already ruled that the restriction on offsetting losses from share sales was unconstitutional and referred the question to the Federal Constitutional Court.

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After a long dispute, the Federal Council has now approved the compromise proposal of the Mediation Committee of the Bundestag and Bundesrat on the Growth Opportunities Act. The package of measures should lead to relief of 3.2 billion euros. The compromise provides for numerous changes to the law, including the introduction of a declining balance for wear and tear (depreciation) for residential buildings of five percent, the introduction of a declining balance on movable assets for nine months and an increase in the loss carryforward to 70 for a period of four years percent (excluding trade tax) and the expansion of tax support for research.

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The Münster Finance Court is currently examining whether the taxation of the energy price flat rate, which is intended as relief, is legal. The energy price allowance, known as EPP for short, was paid out from September 2022 as compensation for the high energy costs. Employees, self-employed people and finally pensioners benefited from the one-off payment of 300 euros. The fact that the flat rate was subject to income tax was already criticized by many quarters as part of the legislative process for the 2022 Tax Relief Act.

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Anyone who works from home as an employee does not constitute a permanent establishment for the employer. The Federal Ministry of Finance made this clear in a recently updated application decree. This is particularly important for foreign employers who do not have offices within the country.

If employers were to establish a permanent establishment in the home office of such a foreign employer, this could lead to a tax liability under German law with corresponding tax declaration, reporting and documentation obligations. But domestic employers would also face complex trade tax distribution issues when setting up permanent establishments at the employees’ place of residence.

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If you as a natural person or your company have business relationships or investments related to a non-cooperative tax jurisdiction, you must submit certain information to the tax office and, if applicable, the Federal Central Tax Office. This is what the tax haven defense law provides, with which Germany implements EU law. More…

The limited tax liability on the licensing or sale of rights entered in a domestic public book or register will be abolished retrospectively. This is a further building block of the Annual Tax Act 2022 announced on December 20, 2022. The limited tax liability of rights registered in Germany, the so-called register cases, has occupied internationally active groups of companies intensively in the past two years, since taxpayers who are not resident in Germany also have a could have liability. However, the law still provides for exceptions for tax havens. More…

The Federal Council has approved the Future Financing Act, which brings together regulations from corporate law as well as capital market and tax law. The package with over 30 points is intended to make it easier for small and medium-sized companies and start-ups to access the capital market, better promote investments in renewable energies and align tax regulations for investment funds with the requirements of other EU states. The aim is to make Germany more attractive as a location for national and international investors. More…

If you inherit an apartment or house, you have to be prepared for higher taxes. The background to this is the Annual Tax Act 2022, which was announced on December 20, 2022. It changes the calculation basis for the legally regulated valuation of real estate. The aim is to adjust the real estate valuation to the actual price level on the real estate market. Experts expect a particularly strong impact on commercial real estate and rented apartment buildings. More…

The Federal Constitutional Court will not review the legality of the withholding tax after all. The reason for this is the agreement reached in a legal dispute between a plaintiff and the relevant tax office. The Lower Saxony finance court had asked the highest German court in Karlsruhe to carry out a corresponding review because it considered the special tax rate of 25 percent on capital income to be unconstitutional. This submission has now been rescinded. More…

Employers can give their employees a so-called inflation compensation premium of 3,000 euros tax-free until the end of 2024. This is what the federal government’s third relief package provides for. Companies can transfer the tax and social security-free special payment in addition to their wages. However, employees are not entitled to the EUR 3,000 bonus. Employers decide voluntarily whether and how much is paid for the inflation compensation premium. More…

The mobility premium is a temporary tax incentive for low earners. Employees whose wages are not subject to flat rate taxation can apply for a tax-free mobility premium of 14 percent as tax credit. The regulation affects those for whom the increased distance allowance has not led to any tax relief from the 21st kilometre. The measure from the Tax Relief Act applies to the period 2021 to 2026. More…

In the case of contracts for software development, there may be an obligation to deduct taxes under Section 50a of the German Income Tax Act. The Federal Ministry of Finance has now pointed this out in its letter of August 2, 2022. After changes in copyright law for software last year, this specification is relevant for all companies that have software programmed by contractors abroad. This applies to all open cases where the contract was concluded after June 6, 2021. More…

The federal government has passed another tax relief law for citizens and entrepreneurs to cushion the rising energy prices. A one-off energy allowance of EUR 300 is to be paid out to all employees who are subject to income tax. Added to this is the increase in the distance allowance, the basic allowance and the employee allowance. The simplifications apply retrospectively from January 1, 2022. More…

The Federal Ministry of Finance wants to offer concrete help to businesses, self-employed and companies as well as all taxpaying citizens in the pandemic with various measures such as the deferral of tax payments, the adjustment or reimbursement of advance payments and the suspension of enforcement measures. We present some important changes here. For specific advice, please contact us directly:

More time for submitting tax returns 2019 and start of interest payments
The 2019 tax return, which is prepared by tax consultants, does not have to be submitted until the end of August 2021. This has now been decided by the Bundestag and thus extended the previous deadline by five months. In addition, the regular fifteen-month interest-free waiting period for the 2019 tax period has been extended by six months. The interest run for the taxation period 2019 does not begin until the beginning of October 2021.

Innovations regarding insolvency
The suspension of the obligation to file for insolvency will be extended because not all applications for state aid have yet been processed. The obligation to file for insolvency is therefore suspended until April 30, 2021 for companies that can expect state assistance.

Easier assessment of taxes
Companies and the self-employed receive a wide range of facilities for setting and collecting the tax due. The prerequisite for this is that the taxpayer is “directly and not insignificantly negatively affected” by the Corona crisis. Among other things, there will be a simplified deferral of due tax payments, enforcement measures will be suspended or the deadline for filing income tax returns will be extended.

Write off movable assets on a degressive basis again
In terms of income taxes, movable assets can be depreciated using the degressive method for 2020 and 2021. The resulting higher operating expenses can be taken into account with an application to reduce the advance payment. In addition, special depreciation can be claimed.

E-Vehicles as company cars
The purchase price limit for e-vehicles will be raised to 60,000 euros for purchased after December 31, 2018.

Changes in trade and turnover tax
In the case of trade tax, the exemption for additional items will be increased to EUR 200,000 from the 2020 collection period. The turnover tax rates have been temporarily reduced, no turnover tax will be levied on donations of protected goods and input tax reimbursement will be facilitated.

Increase in the reduction factor for income from business operations
The reduction factor according to § 35 EStG will be increased to four times the trade tax assessment amount. So far the factor has been 3.8 times. This means that private entrepreneurs can be completely relieved of trade tax up to a rate of up to 420 %.

Reasonably accommodating indirect taxes
Main customs offices have been instructed to adequately accommodate taxpayers with nationwide regulated taxes such as import sales, energy or air traffic tax.

Extension of the Transformation Tax Act
Under the Transformation Tax Act, the tax retroactive periods are temporarily extended to twelve months. This also applies to applications for registration and for contribution agreements concluded in 2021.

Corona bonus remains tax-free
Employers can still pay their employees a one-time corona bonus of up to 1,500 euros until the end of June 2021 and this remains tax-free for the employee. The subsidy also remains free of charge in social security.

Short-time work allowance tax-free
Employer subsidies for short-time work allowance in the period from March 2020 to December 2021 are made tax-free. The limited and temporary tax exemption has thus been extended by one year.

Employees receive a flat-rate home office fee
Anyone who temporarily worked in their own apartment in 2020 and 2021 due to the pandemic but did not have a home office can claim a flat rate of five euros for each of these days and a maximum of 600 euros for the calendar year as operating expenses or advertising expenses.

Relief for single parents
In 2020 and 2021, the relief contribution will be increased to 4,008 euros for single parents for their higher care expenses. An application must be submitted once for this.

Higher allowances for volunteers and trainers
The exemptions for volunteers and trainers will be increased: for volunteers, the allowance is now 840 euros, for trainers it is 3,000 euros. From 2022 the exemption limit for benefits in kind will rise to 50 euros.

Special regulation for cross-border commuters
In order not to trigger a change in taxation law for cross-border commuters, for example by working in the home office during the pandemic, Germany and its neighboring countries Belgium, Luxembourg, the Netherlands, Austria, France as well as Switzerland and Poland have made special bilateral regulations.

Discount for income from agriculture and forestry
The highest tax authorities of the federal and state governments provide application forms for a tariff reduction for income from agriculture and forestry for the years 2016 and 2019 with explanations and a working aid.

Research allowance doubled
For investments in research, development and future viability of own products, the subsidy rate of the tax allowance will be doubled from half a million to up to one million euros.

Corona aid is an expense allowance
The bridging aid as well as the November and December aid are an expense allowance and must be recorded in the cash basis accounting or in the profit and loss statement as taxable operating income. However, they are not taken into account when determining the tax prepayments for 2020 and 2021.

Joint assessment may be possible for same-sex married couples, including for previous assessments dating back to 2001. In the view of the Hamburg fiscal court, as a non-fiscal law, the marriage equality act can be considered to be an event with retroactive effect on taxation as defined by the German Fiscal Code. This would justify a retroactive change to income tax returns finalised since 2001. The court has permitted an appeal to the Federal Fiscal Court, which has already been lodged (BFH III R 57/18). No ruling has yet been made by the Court.

The EU Commission has obligated Member States to disclose information on some cross-border tax arrangements. This duty of disclosure is to be effectively transposed into national law by 1 July 2020 (Directive (EU) 2018/822 of 25 May 2018) and must also extend retroactively to arrangements introduced from 25 June 2018. If the German draft legislation from two federal states is implemented throughout Germany, we can expect significant uncertainty to arise in the implementation of this legislation. The Altehoefer firm will monitor further developments closely.

The German Federal Fiscal Court has corrected the view of the tax authorities, according to which the tax treatment of losses from the disposal of shares does not depend on the costs of disposal. Even if the costs of disposal exceed the amount of the consideration, a loss must be recognised for tax purposes for the private investor (judgment of 12 June 2018 VIII R 32/16). This ruling also amends the approach taken by many German custodian banks, which have not always included such losses in loss compensation calculations due to the requirements of the financial authorities.