Lohnsteuer
The additionality requirement is law with effect from 2020 - it was retroactive, but is that correct?
Within the framework of the Annual Tax Act 2020 (JStG 2020, published in the Federal Law Gazette 2020 Part I No. 65 on 28 December 2020), the criterion of "in addition to the wages originally owed" was legally defined for the first time with the introduction of Section 8 (4) EStG (German Income Tax Act). The new regulation came into force retroactively for application in all open cases for the calendar year 2020. This overrode a previously more favourable BFH ruling with effect for the past.
Our experience from accompanying various external wage tax audits indicates a clear trend that the tax authorities are (will) increasingly and very critically question the additionality requirement in the context of the audits that have now begun and are due to begin. Past audits do not provide any certainty in this regard for subsequent periods, if relevant remuneration components have not been addressed in the audit to date. Also, information provided prior to the amendment of the law in this context is no longer sufficiently binding, since according to some administrative opinions, the legal requirements have changed.
From Prof. Dr. Nikolaus Kastenbauer, Johanna Wolter und Elise Dammenhayn
News on wage tax obligations of a foreign company when using a domestic service/management company
The German Federal Fiscal Court (Bundesfinanzhof, BFH) recently issued a ruling on March 23rd, 2022 (Case No. III R 35/20) in a trade tax case concerning the engagement of a management company based in Germany constituting a permanent establishment in Germany. In our opinion, the statements made here can be applied to wage tax situations, which is why we would like to take a closer look at this.
Introduction
Every employer who has a residence, habitual abode, executive board, registered office, permanent establishment, or permanent representative in Germany within the meaning of the German Fiscal Code (AO) is obliged to withhold wage tax ("domestic employer" within the meaning of § 38 (1) No. 1 EStG). The definition of a permanent establishment according to § 12 AO and the definition of a permanent representative according to § 13 AO are decisive for this.
Accordingly, a permanent establishment is, in principle, any fixed place of business or plant that serves the activities of an enterprise (§ 12 S. 1 AO). A permanent representative is, in principle, a person who manages the business of an enterprise on a sustained basis and is thereby subject to its material assignments (§ 13 S. 1 AO). Note: The standard examples of §§ 12 S. 2, 13 S. 2 AO will not be discussed in more detail here.
From Stefan Sperandio, Prof. Dr. Nikolaus Kastenbauer, Thorsten Leisinger
Options for the provision and tax-free (private) use of a business telecommunication device
In its ruling of 23 November 2022, file no. VI R 50/20, the German Federal Fiscal Court again had the opportunity to review the application of the law by the tax authorities. In this ruling, the court took the side of the taxpayers and offers scope for design. Accordingly, the purchase of an employee-owned cell phone by the employer for a small amount and the subsequent transfer of use of this device back to the employee can be tax-free and does not constitute an abuse of the law.
"Bring your own device" (BYOD) and other terms, as well as ideas to connect employee-owned IT devices for work, are all the rage among the relevant departments to increase sustainability and employee satisfaction. This can, for example, extend the useful life of existing devices and avoid the need to own multiple devices.
Again, however, as is so often the case, it is advisable to include wage taxes in the thought process for a more complete picture.
From Prof. Dr. Nikolaus Kastenbauer, Johanna Wolter, Simon Schön
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