Service Profile

We have broken down our service profile into four segments. We inform you of the main aspects of our service profile and things worth knowing about each segment in tabular form.

Things worth knowing about taxes

Abandonment of formal relevance

The adoption of the BilMoG was effectively an intervention in the common basis of the annual accounts under GAAP and the tax statement, which remained unknown in the far-reaching form in which it is now represented. Such intervention concerns the virtual abandonment of the formal relevance of the balance sheet for the tax statement. While the abandonment of the reverse principle of correlation, namely the requirement that an appropriate assessment was to be made in the commercial balance sheet for the tax assessment, was an express reform intent of the legislators and at the same time broadly accepted, the voting right retention incorporated into § 5, para. 1 EStG initially remained unnoticed in terms of relevance. Accordingly, the fiscal business assets are to be reported and shown in accordance with the generally accepted accounting principles, unless an alternative approach is selected when exercising a fiscal voting right. This limitation will presumably soon show a far-reaching influence. Not only in that this gives rise to the potential or even the necessity for commercial depreciations other than fiscal ones are to be reported. On the commercial statement, the alternative reporting method will result in latent taxes being shown to a larger extent.

Fiscal voting rights ensue in the areas mentioned below:

  • 1. Subventional voting rights: e.g.:
    - Voting right for transferring hidden reserves (§ 6b EStG)
    - Increased depreciations, special depreciations (7g EStG)

  • 2. Depreciation voting rights
    - Methods voting right with scheduled depreciation (§ 7, para. 1 to 3 EStG)
    - Partial value depreciation (§ 6, para. 1 No. 1 and 2 EStG)
    - Lifo consumption sequence (§ 6, para. 1, No. 2a EStG

    The extent to which voting rights determined by administrative directives or jurisprudence are to be incorporated into this examination must be reviewed on a case-by-case basis. In some parts, the BMF has already adopted a position. In others, it is still unclear. Ultimately, it appears that the requirements and potentials set by the new rule for relevance need to be arranged in due time and deliberately in order to gain an insight into the taxation effects. The influence of the new rules on the commercial balance sheet and hence on the accounting procedures are no less important, however.

Key provisions of the Tax Amendment Act 2010

Revoking the time limit for transferring hidden reserves when selling barges (§ 6b, § 52 EStG): Continued emphasis should be given to the investment incentive in accordance with § 6b EStG. According to the previous legal position, the transfer of hidden reserves when selling barges is subject to a time limit of up to and including 2010. This time limit is being revoked, as the agreed purpose continues to exist.

Material and formal amendment requirements for the notice on loss determination and tax assessment for the following year: The amendment of § 10d, para. 4, clauses 4 and 5 EStG clarifies the fact that the first or corrected loss determinations, according to the enforceability of the tax notice for retrospectively declared losses, are possible only if the tax notice could also be amended. The legal amendment is a response to an amendment to the jurisprudence of the Federal Tax Court and legally establishes previous administrative practice.

No speculative deals with consumer goods: Contrary to the administrative conception, the BFH has decided that the sale of objects of daily use within one year of their acquisition is subject to taxation because § 23, para. 1, No. 2 EstG comprises all commodities under private assets. This jurisprudence is being legally annulled in that the sale of such objects within the holding period of one year has not been subject to taxation since the JStG 2010 came into effect. This is because these objects - as per the legal reasoning - are not acquired with the aim of making a profit in the short-term. This applies only in exceptional cases, as with the sale of antiques, objet d'art and vintage cars.

Clarification in the area of local services (§ 35a EStG) To avoid double subsidies, certain measures funded from the public purse are precluded from tax relief. The sense and purpose of this exclusion is not to subsidise measures funded from the public purse twice. The amendments apply for the first time for expenditure made during census, insofar as the services for which the expenditure is made was contributed after 2010 (§ 52, para. 50b, clause 6 EStG).

Taxability of transfer compensation for the transfer of a sportsman from an overseas club to a domestic club (§§ 49, 50a EStG): According to the ruling by the Federal Tax Court of 27 May 2009, the legal situation that used to be applied for the taxation on transferring a sportsman is to be reconstituted. That means, remuneration earned for creating the opportunity to contractually obligate a professional sportsman as such in his home country (transfer of sportsmen in the general sense), is to be subject to taxation in accordance with § 49, para. 1, number 2, letter g EStG. This provision is applicable from the 2010 assessment period.

Exemption from the obligation to submit an income tax return (§ 46 EStG): In allowable deductions for unlimited and limited assessable employees with wages below the tax burden limit (e.g. for seasonal workers), there is no obligation to submit an income tax return, including for 2009.

Temporary regulation up to the application of electronic wage tax deduction criteria (§ 52b EstG): The current conception of §§ 39 and 39e EStG assumes that the electronic wage deduction criteria (ELStAM) will be introduced during calendar year 2011 and must then be applied. However, the current development status of the procedure for electronic wage tax deduction criteria does not permit the procedure to be applied during calendar year 2011. Due to the applicable legal position, a wage tax card was issued for the last time for calendar year 2010. As the wage tax has to be deducted during the transition period (2011 - 2012) without the new wage tax card, transition regulations were created with § 52b EStG. In this process, more of the employee's rights with regard to data ownership were considered.

Introduction of a statute of limitation regulation for issuing the certificate required for private cultural entrepreneurs to be VAT exempt in accordance with § 4, para. 20, letter a, clause 2 UStG. Retrospective tax exemption with the consequence of a retrospective lapse of the input tax deduction entitlement (reversal of input tax deductions) will only be possible to a limited degree in the future (4 years). This creates legal certainty for the entrepreneurs concerned.

To combat VAT fraud, the tax liability of the service recipient in terms of VAT is expanded to supplies of industrial scrap, scrap metals and other waste, as well as to the services of building cleaners (§ 13b UStG)

§ 15, para. 1b UstG re-regulates input tax deduction for mixed-use properties. Accordingly, the tax for deliveries, the import and the intra-community acquisition and also for other services in connection with a property is exempt from input tax, insofar as it is not allocated to the use of the building for the company's purposes. The transition regulation for the re-organisation of input tax deduction is expanded to building applications submitted prior to 1 January 2011.

Expansion of the duty to provide information in the case of money laundering as an administrative offence (§ 31b AO): According to the current legal position, the tax authorities have no authority to provide the administrative authorities with facts from which an administrative offence as defined by § 17 of the German Money Laundering Act (GwG) can be concluded. The amendment of § 31b AO enables the administrative authorities responsible for penalising administrative offences as defined by § 17 German Money Laundering Act to more effectively meet their legal remit regarding monitoring the obliged parties pursuant to § 2, para. 1, no. 9 to 12 GwG. Due to the high level of protected property of secrecy over tax matters anchored in § 30 AO, the scope of the regulation is limited to those obliged parties who, according to previous experience, are particular affected.

Implementation of equal ranking between registered partners and spouses: The laws on inheritance tax, capital transfer tax and land acquisition tax equate partners with spouses.