Weismann Tax Firm

Elena Weismann
Graduate Economist, Tax Consultant
Certified Consultant for International Tax Law
Viewing posts categorised under: News from tax law

Deduction of maintenance costs as an extraordinary charge

by Elena Weismann in News from tax law

In December 2010 a married couple made a payment amounting to € 3,000 as an extraordinary charge. This transaction was intended as a maintenance payment to the spouse’s father living in Brazil. In May 2011 the couple transferred an additional €3,000 to the father. The tax office regarded the first payment as a maintenance payment for the period from December 2010 till April 2011, allowing only a pro rata amount for December 2010 to be deducted as an extraordinary charge in 2010.

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Influence on wage when receiving a petrol voucher from an employer several months in advance

by Elena Weismann in News from tax law

If an employee is provided with fuel vouchers several months in advance, the entire non-cash purchase is deemed to have been paid upon receipt of the vouchers. This is also the case when the employer and employee have reached an agreement that only one voucher with a maximum total value of € 44 (allowance for non-cash benefits) may be redeemed per month.

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Correction of an invoice in the event of an incorrect disclosure of sales tax

by Elena Weismann in News from tax law

A landowner has leased a developed property to a company in order to operate a nursing home. The furnishings of the property were made available to the company through a separate agreement. The property was treated as tax-free, but the company was charged value-added tax for the provided furnishings. Later, the landowner applied for a reduction in turnover tax because the provision of furnishings as an ancillary service to the tax-free lease was also required to be tax-free.

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The turnover limit amount for small business with difference taxation must be clarified under EU law

by Elena Weismann in News from tax law

Sales by small business owners are not subject to VAT. Entrepreneurs are considered small businesses when their total turnover does not exceed € 17,500 in the previous calendar year and is not expected to exceed € 50,000 in the current calendar year. It is not clear which reference value is to be used when differential taxation applies.

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No excessive invoice requirements for VAT return

by Elena Weismann in News from tax law

In order to qualify for the input tax deduction (VAT return) an invoice must contain the taxpayer identification number or the VAT identification number, the quantity and type (commercial name) of the delivered goods and the scope and nature of all services performed at the time of delivery.

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Managing directors of a “GmbH” usually are liable to social security payments

by Elena Weismann in News from tax law

Managing directors of a limited liability company (GmbH) are generally subject to the instructions of its shareholders and are not considered to be self-employed, thus liable to social security payments. This is a decision of the German Federal Social Court.

There is one exception that has been created for managing directors that are also shareholders in the GmbH. These are managing directors that are able to determine the fate of the company by influencing decisions made during the shareholders meeting. This situation applies when a managing director holds at least 50% of the shared capital. In the event that the managing director has lower capital participation, additional regulations in the Articles of Partnership regarding a comprehensive and irrevocable blocking minority are required. In this case the managing director has the opportunity to prevent the approval instructions and decisions arrived at during the shareholders meeting.

In addition, it does not matter whether a managing director of a GmbH has any extensive powers or freedoms, such as in the number of their working hours or their involvement in external relationships. Most important is that which is legally enforceable, in this situation it is the possibility that the managing director can influence resolutions arrived at during the shareholders meeting.

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Child benefit claim during vocational training sessions

by Elena Weismann in News from tax law

Example: A grown daughter completes her education meeting the requirements and qualifications to become employed as a tax clerk. While holding the position of tax clerk she returns to school, continuing her job training and increasing her skills to become a tax specialist. While completing additional training she is regularly employed, working 20 hours a week in a tax office to reach the career goal of tax specialist.  According to the examination regulations, as a prerequisite one must complete additional training as well as three years of professional experience as a tax clerk to become qualified to take the examination to become a tax specialist. As a result of these requirements the first degree received plus continuing education is integral to a uniform course of training.

The Finance Court Düsseldorf has contradicted this situation. According to them a uniform training course shall only be considered to exist if the training sections are factually connected to each other and take place within a narrow time frame. The vocational training as a tax clerk and the subsequent training as a tax specialist do not complete one uniform training unit. The first degree is considered as secondary education and the continued training after the degree is considered an additional education, not part of one continuous program of training.

The Federal Finance Court must make a final decision.

Note:

During this time the Federal Finance Court has decided in another case, that secondary vocational education following initial training as a tax clerk is considered secondary education if the child does not continue at the earliest possible date.

Employment of more than 20 hours a week during the waiting period, between the first and second training programs, as well as throughout the completion of the professional education excludes one from receiving the child benefit claim.

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Liability of the managing director of a GmbH for tax debts due to a lack of organization and supervision

by Elena Weismann in News from tax law

The director of the GmbH as its legal representative is responsible for the tax liability of the GmbH. This liability of fault and responsibility can fall upon the managing director in the following cases: when there is a late filing of the declaration, the intentional non-payment of taxes, or due to a grossly negligent breach of the imposed obligations.

In one case of the fiscal court in Hamburg the accounting of a GmbH was done by the owner’s father and the tax returns were surrendered without the necessary control. As a result of incorrect invoices issued by the father to the GmbH the company owed VAT to the state.

The Managing Director had to pay the incurred debts and was accused of organizational and monitoring negligence. The court sentenced the Director to take notice of the accounting mistakes made by his father because the VAT returns discussed amounted to 42% of the total VAT returns of the company.

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Exemption from inheritance tax regarding a legal estate

by Elena Weismann in News from tax law

If a spouse inherits an apartment from a testator that has been used for residential purposes (such as a family home) and is situated in Germany, the European Union or the European Economic Area, this transaction remains tax-free under certain conditions.  One condition is that the apartment must be used by the spouse (Purchaser) as their own residence immediately after the acquisition.

The German Federal Finance Court has decided that the tax exemption can only be applied to this situation if the testator was the legal owner of the apartment at the time of their death.

In this case the testator (a wife) bought an apartment and moved in with her husband, however she was not yet registered as the owner of property in the land register. In this case, although he was registered there after her death, he had to pay the inheritance tax for the full market value of the apartment.

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Estimates of unknown incoming payments

by Elena Weismann in News from tax law

The tax authorities must estimate the tax bases even when they cannot determine the reason for an incoming payment or the taxpayer is unable to provide sufficient details regarding this payment.

In the case of unknown incoming bank payments, the taxpayer is obliged to clarify to the tax authorities what the payment is for. If the reason for incoming payment cannot be determined the tax authorities are allowed to conclude that this income must be taxed.

The Munich Finance Court has decided that a supplementary estimate of the operating income is permitted in the case where the source or reason for the incoming payments are not indicated.

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