The Supreme Tax Court has handed down three judgments addressing the trade tax addback of hotel room rentals to the trading income and explained that not all expenses for renting hotel rooms must be added back. The decisions are significant for companies in the events industry that regularly rent venues and equipment as well as for companies that rent accommodation for their employees working at other locations.
The Supreme Tax Court decided that payments made by a provider of holiday lettings to the respective owners of the holiday homes in order to sublet them himself to travelers may qualify as rental within the meaning of Section 8 No. 1 letter a Trade Tax Act and must in part be added back to the trading profit subject to trade income tax.
Rental and lease payments for the use of movable fixed assets are not to be added back to trading profits in accordance with Section 8 No. 1 Letter d Trade Tax Act (TTA), insofar as they are to be attributed to the costs for the production/manufacture of current assets.
