Tax & Legal

The Supreme Tax Court decided that the taxable benefit from private use of a company car may not be reduced by parking costs borne by the employee. The provision of a parking space or garage free of charge is considered separate to the benefit in kind of using a company car for private trips.

The Supreme Tax Court ruled that the provision of seats in a VIP hospitality lounge (VIP box) free of charge to business partners and employees constitutes a benefit in kind that may be taxed at a flat rate in accordance with Section 37b of the German Income Tax Act. The benefit in kind was by way of the use of the individual VIP box seat. Expenses relating to empty seats are not to be considered.

The Supreme Tax Court ruled that free or subsidized accommodation and meals provided by the employer in connection with preventive health services are generally not tax-exempt under Section 3 No. 34 German Income Tax Act.

On 9 January 2020 the principal tax authorities of the Federal States issued a decree on the monthly average value for income tax purposes of the benefit-in-kind received by employees for the provision of electric bicycles by their employer.

The finance ministry has issued a decree on the taxation of the benefit in kind from staff parties and similar functions in 2015.

The finance ministry has brought its decrees on subsidised staff loans and on the flat rate taxation of benefits in kind available to employees generally up to date in line with recent court decisions. There are no major changes in substance.

The finance ministry has instructed tax offices to follow the Supreme Tax Court in allowing employees to value their benefit from subsidised staff purchases under the general rules for benefits in kind, if more favourable.

The finance ministry has decreed that lump sum and pro rata payments by the employee reduce the company car benefit in kind whilst the assumption of specific costs does not.

The Supreme Tax Court has allowed employees to base the benefit in kind from their staff rebate on purchases of company goods on either of the two alternative methods laid down in the Income Tax Act, taking the lowest locally available retail price net of all rebates in both cases.