Benefits Compliance Tracker
Benefits for employees are an important part of staff retention and increase employer attractiveness. The accurate documentation, evaluation, and taxation of these benefits pose significant challenges for numerous companies, and the process often proves to be both time-consuming and costly.
The Benefits Compliance Tracker developed by PwC can assist in significantly reducing the workload for your payroll and tax department. Additionally, it supports lowering your company's overall tax burden by optimally utilizing tax exemption limits and tax-free allowances while ensuring compliance with necessary regulations.
By Louisa Jonat, Deniz Özcan and Armin Custovic
On the consideration of expenses that reduce benefits in the context of a company car transfer
The ruling of the Federal Fiscal Court of 4 July 2023 (VIII R 29/20 BStBl. 2023 II, 1005) deals with the tax treatment of expenses that reduce benefits, such as the depreciation for garages, in the case of the provision of company vehicles, in addition to the flat-rate deduction of business expenses for certain full-time self-employed activities. It emphasizes the need for clear agreements between employers and employees in order to be able to deduct any expenses. Facts of the case
In the underlying case, the plaintiffs are married and were jointly assessed for income tax. The plaintiff was employed by X-AG (stock corporation) in the year in dispute. The plaintiff also earned income from employment. X-AG provided the plaintiff with a company car and a second car, which was used by the plaintiff, for business and non-work-related use. X-AG assumed all running costs, including fuel costs. The non-cash benefit for the use of the vehicles was taxed according to the so-called 1% rule for general private use and the so-called 0.03% rule for commuting between home and the first place of work. With regard to the second vehicle, the non-cash benefit was reduced by a flat-rate usage allowance for a monthly petrol card.
By Stefan Sperandio, Johanna Wolter and Gurkaran Singh
Threat of Fines for Failure to cooperate in external Wage Tax Audits, Sec. 200a of the German Fiscal Code (AO)
The external wage tax auditor must examine the factual and legal situation that is decisive for the tax liability and for the assessment of the tax (tax bases), both in favor of and to the detriment of the employer obliged to deduct. The employer must cooperate in determining the facts that may be relevant for taxation. Obligations to cooperate for taxes incurred after 31 December 2024 can be demanded after prior warning by means of a "qualified request to cooperate" (Sec. 200a AO). If the taxpayer does not comply with the official request for cooperation within the deadline, a fine for delay in cooperation will be imposed.
Temporal of Application
The aim of Sec. 200a AO is to speed up and conduct external audits more promptly. The provision is applicable for the first time when auditing taxes and tax refunds that arose after 31 December 2024. In addition, Sec. 200a (1-3) and (6) AO also applies to taxes and tax refunds that arose earlier if the audit order relating to them was not issued until after 31 December 2024.
The previous legal situation, which provided for the imposition of fines for delay in accordance with Sec. 146 (2c) AO for the breach of duties to cooperate, was replaced by Sec. 200a AO with effect from 1 January 2025.
By Stefan Sperandio and Benedikt Sperandio
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