ultrasmart all-digital heavy-duty forensic german accounting - business consulting - forensische Buchprüfung
  • Home
  • German Taxes, Accounting, Business
  • Für Steuerberater, Rechtsanwälte
  • Contact/Imprint
  • News
  • Privacy policy

Loss of non-profit status in Germany for disproportionately high managing directors' remunerations

19/9/2020

 
Picture
When a non-profit corporation grants its managing director a disproportionately high remuneration for work, it constitutes a misuse of funds (German Federal Court of Finance, judgment of March 12, 2020, V R 5/17). This can lead to the revocation of the non-profit status of the corporation by the German tax office. The board members should check, or let check, in advance of any salary adjustments their respective proportionality, as they can, and must, be determined in accordance with the arm's length principle. ​


Read More

COVID-19 and refusal to work in Germany

20/8/2020

 
Picture
According to Section 3 of the German Occupational Safety and Health Act, the employer is obliged to take all measures appropriate to the circumstances of the company to protect the employee from infection. The health and safety regulations of the German Federal Ministry of Labor and Social Affairs are constantly being revised and all employers are obliged to inform themselves about them as soon as possible. As soon as an employer is unsure which protective measures need to be taken for his specific company, he can contact the German Federal Institute for Occupational Safety and Health (BAuA). 
The employer is responsible for the operational health care, but not for the public health care. 

Employee's refusal to work 
If the employer takes the necessary protective measures and informs the employee about it, he can demand the work performance from him. The mere fear of infection does not release the employee from the duty to work. 
Exception: the employee belongs to a risk group. In this case, the employee should provide a medical certificate and the employer and employee must work together to find a solution. Usually, they then agree on a sick leave. 
If the employee refuses to work despite everything, the employer can issue a warning or even notice. 


Read More

Leasing and VAT in Germany

14/8/2020

 
Picture
Delivery or other service on leasing
Depending on the configuration, leasing or certain rental contracts can be viewed as a delivery (provision of control over an object) or as other service (transfer of use of an object). This has a decisive influence on the VAT assessment, because the place and time of the leasing contract are crucial for determining the amount of sales tax (VAT). While until recently leasing contracts within the EU were assumed to be deliveries when civil property passed to the lessee at the latest when the last installment was paid or the delivery was actually exercised, this is now changing for all rental and leasing contracts that were concluded after March 18, 2020 (Section 3.5 Paragraph 5 UStAE (VAT Application Decree); Art. 14 Paragraph 2 Letter b VAT Regulation; ECJ, judgment of October 4, 2017, Case C — 164/16). For the delivery to be assumed, there are two cumulative requirements to be fulfilled:
  • the contract must explicitly contain a clause on the transfer of ownership of the object of the rental or leasing contract from the lessor to the lessee AND
  • it must be clear from the terms of the contract that ownership of the object should automatically pass to the lessee if the contract is executed as planned until the contract expires. The time of the conclusion of the contract must be taken into account and the requirements assessed from an objective perspective. ​


Read More

COVID-19: VAT reduction in Germany

24/6/2020

 
Picture
For the period from July 1, 2020 to December 31, 2020, the sales tax in Germany will be reduced from 19% to 16% for the standard tax rate and from 7% to 5% for the reduced tax rate. The application of the tax rate is based on the performance date.
For companies entitled to deduct input tax, it does not matter whether the service was received before or after the time of the tax rate change; it is important that a correct invoice is available. Invoice defects lead to the loss of the input tax deduction. However, if services are rendered to recipients who are not entitled to deduct input tax, they should be carried out during the above-mentioned period if possible. 


Read More

Reclaims of paid invoices by insolvency contestation in Germany

25/5/2020

 
Picture
As part of an insolvency procedure, the insolvency administrator will always check whether he can reclaim debts paid by the company (art. 133 (1) InsO, German Insolvency Code). Often this will relate to bills paid up to 10 years before the application for the opening of insolvency proceedings, and afterwards. However, two conditions must have been met for this:
  1. Creditors disadvantage by the debtor - the other creditors of the insolvent company were deliberately disadvantaged by the payment of this customer/supplier.
  2. Positive knowledge of the debtor's intent on the part of the opponent of the contestation - the paid customer/supplier must have known with certainty that the insolvent company wanted to prefer him. ​


Read More

Proper use of COVID19 emergency grant-in-aid in Germany

24/4/2020

 
Picture
A. Tax classification of COVID19 grants
The COVID19 emergency grants-in-aid from the German federal and state governments are taxable grants and must, therefore, be treated as operating income. Accordingly, they must be recognized in the determination of income as other operating income; as real subsidies, they are not subject to VAT.
B. Correct use of the COVID19 grants:
I. Check for eligibility:
1) Requirements for ALL grants 
(from the federal and state governments in Germany):
  • the professional activity is the main source of income AND
  • the applicant is actually in an existence-threatening economic situationdue to the effects of the COVID19 epidemic.
    Partially self-employed persons such as employees, civil servants, pensioners, students, etc. cannot apply for the grants. Similarly, companies that were already in economic difficulties before the outbreak of the COVID19 epidemic are not eligible to apply.


Read More

New regulation of documentary evidence for deliveries within the EU

21/3/2020

 
Picture
The new regulation of documentary evidence for intra-Community deliveries is the implementation of an EU directive, can be found in § 17a UStDV (German VAT Implementation Regulation) and now contains a new term: presumption of arrival. The presumption of arrival is only valid if the delivering entrepreneur:
A. sent the item - by themselves or through a third party - AND
B. is in possession of two documents which
  1. do not contradict each other,
  2. issued by different parties AND
  3. confirm the arrival of the item at the recipient.
    These parties must be independent of the supplier and the customer.


Read More

New tax-related requirements for intra-EU deliveries

28/2/2020

 
Picture
From 01.01.2020 onwards, a substantive legal prerequisite for a correct tax-free intra-community (intra-EU) delivery is also a punctual submission of the summary report, which must include the intra-community delivery. In addition, the newly introduced article 6a (1) no. 4 UStG (German VAT Act) requires the customer to use a valid VAT identification number (VAT-ID) towards the entrepreneur.


Read More

Tax subsidy for rental apartments in Germany

28/12/2019

 
Picture
Recently, a new special depreciation rule was created in Germany pursuant to § 7b EStG (German Income Tax Act) for the purchase and production of new rental apartments. In addition to the annual straight-line depreciation of 2% per annum, the special depreciation amounts to up to 5% per annum over a total period of 4 years. The special depreciation favours new housing developments, which were produced on the basis of a construction application submitted after 31 August 2018 and before 1 January 2022. ​



Read More

Cash flow advantage in the context of input tax deduction in Germany

25/10/2019

 
Picture
In accordance with art. 15 (1) UStG (German Value Added Tax Act), two conditions must be met for a lawful deduction of input tax in Germany:
  1. there is a proper invoice (art. 14 UStG) AND
  2. the exchange of services between the provider of the service and the beneficiary has taken place.
To these two conditions the German tax office pays special attention, particularly in the case of subsequent tax audits.
An immediate payment of the invoice is not required. This also applies if the bill is settled later, according to agreement. This ruling applies to all entrepreneurs, irrespective of the method of determination of profits and the size of the enterprise.
If these two conditions are met, at that time the pre-tax claim must be asserted in the VAT advance declaration. A later deduction of input tax is no longer possible.


Read More

Company purchase in Germany and duty of the employers to inform

20/9/2019

 
Picture
The employers involved in a transfer of a company are required under art. 613a (5) BGB (German Civil Code) to inform the employees about the transfer of business. None or incorrect information may have consequences for the exercise of a right of objection by the employees and may lead to claims for damages. Both the previous and the new owner of the enterprise or the division are required to inform the employees affected by the transfer of the business. The obligation to provide information applies regardless of the size of the company. Therefore, business sellers and acquirers should agree on the manner in which they fulfill their joint obligation. In the case of incorrect or omitted information, the employees concerned may choose to assert their rights either against the seller or the acquirer. If there is a works council, it too must be informed. However, informing the works council alone is not sufficient.


Read More

Special leasing payments and taxes in Germany

11/8/2019

 
Picture
Through a federal-and-states decree, which was recently made public by the Tax Authority Hamburg, a tax-saving model for profit determinations under art. 4 sec. 3 EStG (German Income Tax Act) connected with leased company cars is to be prevented. Until now, high special leasing payments for leasing contracts with a term of less than five years have resulted in immediately deductible operating expenses in full. The later, very small leasing rates then resulted in small expenses. ​


Read More

German inheritance tax reduction due to costs for corrected tax returns

25/7/2019

 
Picture
In its most recent judgment of 15 May 2019 (reference number: 7 K 2712/18), the Finance court Baden-Wuerttemberg contradicts the previous administrative view: it ruled that the tax consultancy costs paid by the heir for the preparation of corrected tax returns on the basis of income not yet declared or incompletely declared reduce inheritance tax. A legal obligation for the heirs to correct the tax return arises only in the event of tax-increasing facts. 


Read More

Prepaid expenses and deferred charges and substantiality in German accounting

16/6/2019

 
Picture
The Financial Court of Baden-Württemberg has ruled in a new judgement (02.03.2019, 5 K 548/17) that there is no obligation for the recording of non-substantial amounts as prepaid expenses and deferred charges. As non-substantiality limit is considered the amount for the immediate depreciation of fixed assets. Background to the lawsuit were non-substantial or annually recurring amounts such as vehicle tax, motor insurance, etc.


Read More

Vacation during parental leave in Germany

30/5/2019

 
Picture
According to the German Federal Leave Act, there is a vacation entitlement for the period of parental leave. However, the employer may, in accordance with art. 17 (1) sentence 1 BEEG (German Parental Allowance and Parental Leave Act), reduce this holiday entitlement, in accordance with EU law as well.


Read More

Liability of all managing directors of German GmbHs (CEO, COO, CFO, CTO, CREATIVE, HR) in cases of over-indebtedness and insolvency

17/4/2019

 
Picture
After the occurrence of insolvency or the determination of over-indebtedness of a German GmbH, all managing directors are personally liable in principle for all payments of the GmbH, which are made by the GmbH after that date. (art. 64 GmbHG, German Companies Act) The non-financial managing directors (CEO, COO, CTO, CREATIVE, HR) are therefore liable together with the CFO for faulty financial transactions.
However, non-financial directors can be exempted from personal liability under the following conditions:
1) A clear division of responsibilities between the managing directors - in written form - is in existence.
2) The non-financial directors have fulfilled their supervisory duties.

Read More

Three ways for the German entrepreneurial company (UG) to the GmbH

15/3/2019

0 Comments

 
Picture
When an entrepreneurial company (UG) has built sufficient legal reserves - art. 5a sec. 3 GmbHG (German Companies Act) - in order to be able to establish the minimum share capital of a German GmbH, it may issue a shareholder resolution - art. 57c GmbHG - for the legal reserve to be converted into share capital.
However, a
mandatory requirement for the conversion is the examination of the last year-end report of the UG - art. 57e GmbHG - by a certified auditor or a sworn accountant.


Read More
0 Comments

Postponement of priority declaration and ban on recognising provisions for anticipated losses for German corporations

31/1/2019

0 Comments

 
Picture
The financial debt overload of a corporation can constitute a reason for filing a bankruptcy petition (art. 19 Insolvency Act). There is a financial debt overload when the liabilities exceed the assets, as for example in the case of a loss not covered by equity. In order to avoid having to file for bankruptcy, the shareholders often issue a postponement of priority declaration for their own claims against the company.


Read More
0 Comments

Emergency management of corporations in Germany

14/12/2018

0 Comments

 
Picture
Emergency management is set up when


a) no other manager exists AND
b) the managing director can not assume the management (e.g. by death or serious illness, coma).



In such a case,
the shareholders as well as the creditors can submit an application for the appointment of an emergency manager to the local district court and propose a person. It is recommended that a clear regulation for such an emergency be included in the statutes / articles of incorporation at the time of incorporation and that any existing statutes and articles of incorporation be amended as appropriate.



Read More
0 Comments

Business Travel and Employer's Certificate A1 (Germany)

8/11/2018

0 Comments

 
Picture
On the 1. January 2019, a new obligation for all German employers emerges:  
They must ensure that their employees carry a valid A1 employer's certificate on all business trips to other EU countries or Iceland, Norway, Lichtenstein, Switzerland. The employer receives this certificate online from the responsible social insurance institution (health insurance, German pension insurance, etc.). This legal regulation also applies to very short stays of the employees in one of the above-mentioned countries, for example, when they drive across the border to refuel their vehicle. Customs officials of the countries concerned are authorized to stop passengers at any time and to request the presentation of the A1 employer's certificate.


Read More
0 Comments

Marriage and tax class change in Germany

31/10/2018

0 Comments

 
Picture
If you marry in a civil registry office in Germany, after the marriage the registry office will send the details of the marriage to the relevant residents' registration office. The registration office, in turn, transmits this data to the tax authorities. According to the law, the tax authority first assigns to both spouses the tax class IV. These information details are then stored in the ELSTAM database, from which the employers obtain the data for the correct payroll tax calculation.

If you marry abroad, you have to inform the registration office and the tax office after the marriage by yourself.
However, if the tax class IV is not the best option for both spouses, then you must use a form to apply to the tax office to change the tax class to tax classes III and V OR to use the work-factor method.


Read More
0 Comments

Extra sustenance costs (allowances / reimbursements for additional subsistence expenses) in Germany

20/9/2018

0 Comments

 
Picture
Extra sustenance costs are tax-deductible costs incurred on a business trip for eating and drinking of the business traveler. Tax deductible are not the actual expenditures, but only the legally fixed allowances for additional meals.
For the travel expense reporting, a travel expenses statement is required which includes travel times and travel locations next to the travel receipts, not just individual records and documents. The level of the legal allowances depends on country and city. These allowances are regularly adjusted by the German Federal Ministry of Finance to reflect the cost of living of the individual countries.
Consequences of non-compliance with the legal limits:
If the employer pays his employees more than the statutory allowances, then the excess amount is converted into wages subject to tax and social security contributions.



Read More
0 Comments

Loss deduction for German corporations after change of shareholders – continuation

30/8/2018

0 Comments

 
Picture
With the Annual Tax Act 2018, the German Federal Ministry of Finance has rewritten Art. 8c (1) sentence 1 KStG (German Corporation Tax Act) after the decision of the Federal Constitutional Court. It is now stipulated by law that in cases of share transfers of German corporations between 25% and 50% existing loss carryforwards will not be proportionally shortened if the shares were transferred in the period from 1 January 2008 to 31 December 2015. For transfers of shares after 31 December 2015, however, the loss deduction limit shall apply again. The latter has nevertheless to be checked for constitutionality.


Read More
0 Comments

Risks of obsolete GmbH-shareholders lists in the German Trade Register

27/5/2018

0 Comments

 
Picture
Since November 1, 2008, according to Art. 16 of the German Private Limited Companies Act (GmbHG), the list of shareholders in the Trade Register has been upvalued. Since then, it has been regarded as the basis of legitimacy for the exercise of shareholder rights and as a starting point for the good faith acquisition of shares.
However, incorrect or old shareholders lists are still to be found in the Trade Register. As a result, shareholders' resolutions may become void, profit-sharing rights may be disputed, or even share transfers may be declared invalid. These inaccurate lists, therefore, represent a considerable potential for liability risks for the company, the shareholders, and the managing director(s).


Read More
0 Comments

Stricter disclosure requirements for foreign investments of German companies

4/4/2018

0 Comments

 
Picture
NEW: the duty to report foreign investments is extended to naming the commercial activity of the investee.
Until recently, according to Art. 138 of the German Fiscal Code the taxpayer had to report investments in non-German corporations or private companies to the tax office only if the investment – a direct or an indirect one –
a) reaches 10% or more AND
b) amounts to at least 150.000 EUR.
Now, the COMMERCIAL ACTIVITY OF THE INVESTEE must ALSO be reported to the tax office, that is – it has to be included in the tax declarations (income tax and corporation tax). This must be disclosed to the tax office within 14 months after the investment had been realised or after the participation limit had been reached. This deadline is not prolongable. A failure to comply with this reporting regulation constitutes an administrative offence, which can be fined up to 25.000 EUR.
Loss deduction for German corporations after change of shareholders
Automated German advance VAT return, liability entrepreneurs (companies)
0 Comments
<<Previous

    FRANK LEHMANN

    MBA for Finance and Financial Services (UK), Steuerfachwirt (GER)

    Categories

    All
    Bulgarian
    Deutsch
    English
    French
    German Accounting
    German Business
    Online-accounting
    Russian
    Sample-docs
    Spanish

    RSS Feed

    follow us in feedly
Ordeconta GmbH, Berlin, Germany
  • Home
  • German Taxes, Accounting, Business
  • Für Steuerberater, Rechtsanwälte
  • Contact/Imprint
  • News
  • Privacy policy