Application of the daily table for wage tax deduction for employees with foreign working days
If employees receive wages for foreign working days in a month without wage tax deduction in Germany, the tax authorities have required the application of the daily table instead of the monthly table since 2023. Due to the considerable legal uncertainties associated with this and the increased administrative burden, the trade associations approached the tax authorities. The tax authorities have now stated that for salary payment periods up to 31 December 2024, there will be no objections if the monthly table continues to be used in such cases and the daily table is only applied from 2025 onwards.
Compared to the monthly table, the daily table leads to a significantly higher wage tax withholding, and as the legislator has now also ruled out a wage tax refund in such cases as part of the annual wage tax equalisation with retroactive effect from 1 January 2024, this may lead in a definitively high tax burden. This will then also lead directly to higher tax costs for companies with net salary agreements. This is particularly the case for employees with limited tax liability, for whom the wage tax deduction is generally finalised. It therefore remains important to understand whether the application of the daily table from 2025 - as demanded by the tax authorities - is correct at all.
By Stefan Sperandio and Johanna Wolter
Company Events
The Federal Fiscal Court has confirmed that it is irrelevant for the existence of a company event and the 25% flat-rate taxation - in contrast to the 110 euro allowance - whether or not it is open to all members of a company or part of a company.
It is sufficient if it is an event at company level with a social character. In our opinion, this results in a broader scope of application for the application of the 25% flat rate compared to the previous handling. In addition to the well-known Christmas or summer party, in our opinion, a company event can also be deemed to exist if a small number of participants (at least two) meet together for a business reason. As the tax authorities also apply this judgement to past periods, this gives companies room for maneuver and structuring, which leads to a reduction in their tax and possibly social security contribution burden.
By Stefan Sperandio and Johanna Wolter
Allocation of the right to tax wage income if the employee is resident in the home country and works abroad
For employees who work abroad, double taxation agreements assign the right of taxation to the country of residence - unless special regulations apply - if the requirements for assignment to the country of employment are not met. If the person only has a permanent residence in one state, he or she is only deemed to be resident in that state.
If the person has a permanent place of residence in both states, he or she is deemed to be resident only in the state with which he or she has the closest personal and economic ties (center of vital interests). The determination of the center of vital interests is of decisive importance for the assessment of the right to tax. The tax authorities have now also commented on this in detail:
By Stefan Sperandio and Johanna Wolter
Company car taxation - journeys between home and first place of work or external activity?
The question of whether and where an employee establishes a first place of work is regularly the subject of disputes with the tax authorities and before the tax courts. The Federal Fiscal Court has now once again had to rule on a number of cases in this regard. This is not surprising, as the possibilities for tax- and contribution-free employer benefits for travel/accommodation/meal costs at the location of the first place of work are significantly more limited in terms of reason and amount compared to a place of work away from home.
In the context of private company car use for commuting between home and first place of work and possibly also for weekly family journeys home in the context of double household management, an additional benefit in money's worth must be taxed in comparison to the external place of work. In addition, there are higher VAT costs for companies.
The establishment of a first place of work is primarily based on the employer's determination under business or labor law (so-called qualitative criteria). Only if such criteria do not exist or the stipulations made are not clear are the so-called quantitative criteria used as an alternative.
By Stefan Sperandio and Johanna Wolter
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