Aspects of Business Taxation an der Hochschule Rhein-Waal

§1 EStG : Natural person, with residence or habitual abode in GER are subject to unlimited tax liability

Only income generated by individual is taxed. Married = joint assessment IF: 

• Legally married
• Unlimited tax l. for both
• do not live permanently separated

Tax Subject: 

Individual may encounter 

• Unlimited tax liability
• limited tax liability
• extended limited tax liability

Profit Inc. Category

• Income from farming and forestry §13 EStG
• Inc. from commercial act. §15
• Inc. from self-employment §18

Surplus Inc. Categories

• Income from employment §19
• In. from capital investments §20
• Rental Income §21
• Other Income § 22&23

-> a taxpayer can earn income from various categories

• Tax claims ( claim payment, or reimburse overpaid taxes)
• Rule on who is taxpayer(§33 AO) and what is claimed (§37 AO)
• Tax liabilities (how to discharge ones liability)

=> enumerate tax-privileged purposes: 

ex: which purpose an entity must serve to be recognised as a charity able to : 

- collect donations which are deductable for donee

Makes up major part of Fiscal code and deals with how law is administrated between taxpayer and tax authorities

• Assessment Procedure
• Investigative Pr. ( if no return or q's) including tax audits
• Notification Pr. 
• Rectification for false tax notices
• Tax collection Pr.
• Enforcement & liability pr.

In case tax payer chllenges assessment : 

--> Appeal Procedure 

In case of fraud --> Criminial & fine procedure.

- The tax law specifies who is obliged to file tax return. Also anyone requested by the revenue authorities to file a return is obliged to do so.

Once obliged, §149 specifies deadline: 

- 31.following year

- special rule to extend until 28.2 2.following year if tax advisor engaged

If tax payer fails to file. T. Authorities can impose: 

- Late-fining penalty of 0.25%/p.m of tax assess. Min.  of 10 € and max 25,000 € §152

- Interest rate start 15months after end of tax year 

tax payers notified about tax assessment by tax notice. 

§157 AO : tax notice shall be : 

• issued in written or electronic form
• indicate type & amount of as. tax
• indicate person who owes tax
• include instructions on applicable legal remedies
• indicate deadline to seek remedies
• indicate authority where request to remedie is to be filed

=> for tax assessment to come into effect, notice has to be disclosed to person intended.

--> notice is disclosed 3 days after posting ( in GER, 1 month abroad). If 3rd day is weekend or hol. notice is disclosed on next working day §108BGB

It is a known as a skeleton law : A central book from which others are growing. 

- encompasses tax provisions applicable to other tax acts. Avoids repetition of same provision in each legal act. 

-> The fiscal code regulates 2 legal spheres:

1. Substantive ( material ) tax law

2. Procedural(formal) tax law 

Natural person with neither residence or habitual abode 

-> At least 90% of income in calaender year subject to German income tax

OR

-> the income subject to GER IT do not exceed basic tax allowance : 9,168€