Lohnsteuer
Company Pensioners Residing Abroad Without Tax IDs: An Overlooked Group by the Tax Authorities?
Since the introduction of electronic wage tax deduction features (ELStAM) in January 2013, there have been plans to integrate employees with limited tax liability into the electronic process. A significant step in this direction was the activation of ELStAM retrieval on 1 January 2020. Despite this, the electronic transmission of the wage tax certificate for this group of individuals continued to be possible using the eTIN (electronic transfer identification number) instead of the tax identification number (tax ID). However, this option was discontinued with the abolition of the eTIN in January 2023.
The Challenge
As of 1 January 2020, the ELStAM procedure was activated for employees not required to register in Germany. This group includes individuals with limited income tax liability deriving from non-self-employed work, particularly numerous company pensioners and their survivors who often do not possess a German tax ID due to their relocation from Germany decades ago. However, a mandatory prerequisite for the participation of (former) employees in the ELStAM process is the allocation of a tax ID.
From Stefan Sperandio, Anne Dechow and Hatice Ilke Türkmen
ECJ rules on the incompatibility of the "application assessment" with the Agreement on the Free Movement of Persons between the EU and Switzerland
The so-called application assessment pursuant to Section 50 para. 2 sentence 2 no. 4 letter b in conjunction with sentence 7 German Income Tax Act (EStG) enables persons with limited tax liability to be treated as persons with unlimited tax liability upon application. The application of this provision was previously limited to citizens of EU/EEA member states who are resident in the EU or the European Economic Area (EEA: EU member states and Iceland, Liechtenstein and Norway). Switzerland is neither part of the EU nor the EEA. The ECJ has now ruled in a case concerning a German national with permanent residence in Switzerland that this restriction violates the right to non-discrimination pursuant to Art. 7 in conjunction with Art. 15 of the Agreement on the Free Movement of Persons (AFMP) in conjunction with Art. 9 para. 2 of Annex I to the AFMP. The AFMP and its protocols simplify the living and working conditions for EU citizens in Switzerland.
Facts of Case C-627/22
The plaintiff, a German citizen with residence and habitual abode in Switzerland, had submitted an application for income tax assessment in accordance with Section 50 para. 2 sentence 2 no. 4 letter b in conjunction with sentence 7 EStG in his income tax returns for each of the years in dispute 2017 to 2019. He justified his application by arguing that not taking into account the application assessment violated the existing AFMP and was also incompatible with EU law. In the years in dispute, 2017 to 2019, the claimant earned income from employment in accordance with Section 19 EStG. Furthermore, in addition to car expenses, other travel expenses were also incurred as part of his work.
From Stefan Sperandio, Johanna Wolter and Lea Sophie Bahnemann
DTT-Switzerland: Protocol of amendment to the Double Taxation Treaty (DTT) between Germany and Switzerland dated 21 August 2023
On 21 August 2023, Germany and Switzerland signed a comprehensive protocol of amendment to the DTT between Germany and Switzerland. The protocol of amendment contains several adjustments that are relevant from a wage tax perspective, which we would like to highlight here. The aim for it to enter into force on 1 January 2025.
Clarifications on Art. 15 DTT - Employment
Employer's certificate
According to Art. 15 of the DTT, remuneration can only be taxed in the country of residence, subject to Art. 15a to 19 of the DTT, unless the work is performed in the other country. If the work is performed there, the remuneration received for it can be taxed in the other state. The protocol of amendment has now clarified that in this case the remuneration is to be apportioned on the basis of the actual working days in the period concerned. The employer must certify the working days and the places of work.
From Stefan Sperandio and Johanna Wolter
Tax and social security treatment of VIP boxes
The European Football Championship 2024 has also brought the tax and social security treatment of VIP boxes back into focus. As an incentive, the use of VIP boxes has implications for wage and income tax, VAT and social security contributions. If business partners or employees are invited to soccer matches in VIP boxes, the relevant case law must be taken into account in addition to the opinion of the tax authorities. In particular, the ruling of the Federal Fiscal Court (BFH) of 23 November 2023 (VI R 15/21) further substantiates the previously applicable principles and calls for action in the administrative opinion.
Expenses for VIP boxes
Expenses for VIP boxes in sports facilities are understood to be expenses incurred by the taxpayer for certain sporting events for which the recipient of the service receives certain consideration of an advertising nature for the sponsored event.
The provision of tickets for the VIP boxes generally goes hand in hand with the opportunity to provide hospitality for the taxpayer as well as employees, business partners, etc. The measures can form an overall package that is then possibly invoiced to the sponsor as a total, not itemized amount.
From Stefan Sperandio, Iris Brandes, Johanna Wolter, Natalia Römer-Koshcheeva and Simeon Wahl
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