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Decisions of Lower Saxony tax court
Retroactive application of the tax exemption introduced with the Corona Tax Assistance Act in Section 3 No. 11a EStG for Corona special payments granted from March 1, 2020.
Judgment of July 24, 2024 (9 K 196/22)appealed; Reference number of the BFH: VI R 25/24
In its decision, the 9th Senate of the Lower Saxony Finance Court – as far as can be seen for the first time – dealt with the question of the applicability and interpretation of the exemption provision of Section 3 No. introduced with the Corona Tax Assistance Act of June 19, 2020 (BGBl. I 2020, 1385). 11a EStG. In particular, questions had to be clarified regarding the retroactive applicability of the legal regulation in Section 3 No. 11a EStG, the interpretation of the feature “due to the Corona crisis” and the applicability and interpretation of the JStG 2020 (BGBl. I 2020, 3096). Section 8 Paragraph 4 EStG also newly introduced definition of the additionality criterion.
The plaintiff runs several grocery stores. In May and November 2020, among other things, it paid its employees tax-free cash benefits that were declared as special Corona payments. She informed employees about the special payments through internal notices. At the same time, she announced that, as in previous years, she would grant holiday pay in May and a bonus in November as a voluntary benefit. The external wage tax audit came to the conclusion that the requirements for tax exemption according to Section 3 No. 11a EStG were not met for the special payments made in May and November. The wage tax and other wage tax deduction amounts were determined by a notice of subsequent claim.
The 9th Senate of the Lower Saxony Finance Court dismissed the lawsuit against the additional demand notice as unfounded in its judgment of July 24, 2024. He comes to the conclusion that the tax exemption provision of Section 3 No. 11a EStG is applicable retroactively from March 1, 2020, but the conditions for which were not met in the specific case with regard to the May or November payment. On the one hand, the plaintiff did not provide the services declared as special Corona payments in addition to the wages that were already owed. It was not clear from the overall circumstances that the plaintiff paid its employees the benefits known as the “Special Corona Payment” in May and November 2020 to mitigate the special burdens caused by the Corona crisis. The Senate took into account the information in the salary statements, the wording of the internal information letters posted by the plaintiff, the calculation method and the payment modalities of the special payments. On the other hand, the additionality criterion cannot be regarded as fulfilled either according to the principles of case law on the old legal situation or according to the requirements of Section 8 (4) EStG. The Corona special payment was granted as a replacement for the vacation pay or bonus payment. The wages owed were reduced by this.
The tax court allowed the appeal to further develop the law. This was filed and recorded at the Federal Finance Court under the reference number VI R 25/24.
Further decisions of the Lower Saxony Finance Court
3 K 145/23 – judgment of October 30, 2024
Prepayment penalty as advertising costs
If a loan taken out to finance a rented property is repaid with an early repayment penalty, but the property continues to be used for renting, then the early repayment penalty can be deducted as business expenses from the income from renting and leasing.
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3 K 22206/21 – judgment of September 18, 2024
On the ongoing affiliation with business assets of co-ownership shares in land that were formerly attributable to special business assets when an agricultural and forestry co-entrepreneurship is given up
When transferring or transferring co-ownership shares in land from the special business assets of a co-entrepreneur when the operation of an agricultural and forestry co-entrepreneurship is discontinued before December 17, 2020, the co-ownership shares in the land in question will necessarily be transferred to private assets, unless the transferee is managing the property themselves Co-entrepreneur joins (contrary to BMF letter dated May 17, 2022, paragraph 14 f.).
Appeal filed; BFH-AZ: VI R 27/24
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5 K 44/20 – judgment of December 9, 2021
Free use of a stadium
The free transfer of the use of a stadium previously used by the transferring entrepreneur for the provision of taxable paid services does not entitle the person to correct the input tax in accordance with Section 15a UStG, but does entitle them to tax a free value transfer in accordance with Section 3 Paragraph 9a No. 1 UStG.
Revision permitted; BFH-AZ: XI R 23/23
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Judgment of May 25, 2023 – 10 K 182/20
Determination of the requirements for the tax exemption of renovation income
1. For the interpretation of the elements contained in Section 3a Paragraph 2 EStG, reference must be made to the case law guidelines issued under Section 3 No. 66 EStG old version.
2. For the necessary determination of suitability for renovation, the law does not contain a fixed rule of evidence to the effect that a specific criterion from which suitability for renovation can be derived must necessarily be present. Key indicators of suitability for restructuring include, among other things, the existence of a comprehensible and verifiable restructuring concept or, in retrospect, successful completion of the restructuring.
3. The element of the “intention of the creditors to restructure” has independent relevance within the framework of Section 3a (2) EStG. It would therefore be incompatible to always assume that this element exists if an individual creditor waives a claim in whole or in part in connection with a restructuring.
legally binding
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Judgment of September 2, 2024 – 13 K 185/23
Conversion tax law: Term of sale in Section 22 Paragraph 2 Sentence 5 Paragraph 1 UmwStG
A previous sale within the meaning of Section 22 Paragraph 2 Sentence 5 Paragraph 1 UmwStG only exists if the hidden reserves of the previously received shares are revealed as part of the sale process.
Appeal filed; BFH-AZ: XR 26/24
Good to know
The home office flat rate
The home office flat rate is a tax relief for taxpayers who work from home, as regulated in Section 4 Paragraph 5 Sentence 1 No. 6c of the Income Tax Act.
It allows you to deduct a flat rate of €6 (from 2020 to 2022: €5) per calendar day as business expenses or advertising costs. A maximum of €1,260 (from 2020 to 2022: €600) per year can be claimed.
If the taxpayer has another place of work (e.g. with his employer), the deduction requires that he carries out his business or professional activity primarily from home on the respective calendar day and does not go to another place of work. If, on the other hand, the taxpayer has no other place of work available for his business or professional activity, the daily flat rate can also be deducted if the activity is carried out away from home or at the first place of work on the same calendar day.
The flat rate can therefore be claimed in particular even if there is no home office or if the strict requirements for the tax recognition of a home office are not met in the case of a walk-through room or a work corner or in cases of more than just minor private shared use. The “home office” can therefore also be located in the kitchen, living room or on the taxpayer’s balcony.
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News from the tax court
Conference of the judges of the financial courts
At this year’s conference of judges from the tax courts, which took place from November 18th to 20th, 2024 in the main building of the Federal Ministry of Finance in Berlin, three judges from the Lower Saxony Tax Court gave presentations as speakers.
VRiFG Christoph Schirp gave an overview of the current developments in tax liability law, RiFG Dr. Thomas Keß presented the expanded trade tax reduction and classified the changes through the legislation and the numerous case law issued on the regulation, RiFG Andre Ossinger illuminated the current problem areas in sales tax from a financial court perspective.
The conference of judges of the tax courts is organized by the Federal Finance Academy and takes place annually. It is aimed at judges in the German financial courts and serves for further training and professional exchange.
Image copyright: Nds. FG
VRiFG Christoph Schirp
In-house training with Prof. Dr. Alexander Kratzsch
Current information on the taxation of partnerships was the topic of the in-house training for the judges at the Lower Saxony Finance Court. As a speaker, the court was able to appoint former colleague Prof. Dr. Alexander Kratzsch, who switched from tax law work to tax advice and teaching in 2018. The agenda of the seminar, which was designed as a hybrid event (face-to-face and Skype), included, among other things, the effects of the MoPeG from a commercial law perspective, the effects of the Growth Opportunities Act on partnerships and current case law on various topics, for example on the extended reduction in real estate companies (Section 9 No. 1 sentence 2 GewStG), on the transfer of a commercial loss due to the contribution (Section 10a GewStG) or on the application of Section 3c Paragraph 2 EStG for interest payments to a partnership.
Dr. Alexander Kratzsch is a lawyer, tax advisor and founding partner of the tax and law consultancy in Wiesbaden. He is also a professor of tax and business law at the FHDW Hannover.
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Training “Current information on partnerships 2024”
**How do the recent court decisions discussed in the article illustrate the dynamic nature of German tax law, and what challenges and opportunities do these shifts present for both taxpayers and tax professionals?**
## Open-Ended Interview Questions Based on the Article
This interview seeks to explore the complexities of German tax law, recent court decisions, and the impact on taxpayers and professionals.
**Section 1: Recent Court Decisions & Their Impact**
* The article highlights several recent court decisions with potential impacts on various areas of tax law. Which of these decisions do you believe will have the most significant impact on taxpayers in practice, and why?
*
How do these court decisions reflect evolving interpretations of tax law, and what does this suggest about the future direction of German tax policy?
* For professionals like tax advisors or accountants, what are the key takeaways from these decisions and how might they adjust their advice and strategies moving forward?
**Section 2: Home Office Flat Rate & its Implications**
* The article explains the Home Office Flat Rate. What are your views on this tax relief measure, considering its potential benefits and drawbacks for both taxpayers and the government?
* Considering the increasing prevalence of remote work, how effective is the current Home Office Flat Rate in addressing the changing needs of the modern workplace? Should it be revised or expanded?
* Are there any potential for misuse or loopholes associated with the Home Office Flat Rate, and if so, how can these be mitigated?
**Section 3: News From the Tax Court**
* The article mentions the annual conference of judges from the Tax Courts. What are some of the key challenges and priorities facing tax court judges today, and how do events like this conference help them address these issues?
*
The article highlights in-house training on partnership taxation. Why is it important for tax court judges to stay updated on these complex areas of law, and how does this type of continuing education benefit the broader legal system?
* Beyond legal expertise, what other qualities and skills are essential for judges in the Tax Courts, particularly in navigating the intricate landscape of modern tax law?
**Section 4: Looking Ahead**
* What are some of the most pressing tax-related issues facing Germany in the coming years? What role do you see the Courts playing in shaping tax policy and ensuring fairness in the tax system?
* What advice would you give to individuals and businesses looking to navigate the complexities of German tax law effectively?
**Concluding Thoughts:**
* Is there anything else you would like to highlight regarding the current state of German tax law or the work of the Tax Courts?
