Allowance

In tax law, an allowance is an amount that reduces the tax base .

General

In contrast to the exemption limit , if the exemption is exceeded, not the entire income has to be taxed, but only the part of the income exceeding the exemption. The German tax law provides numerous exemptions, which were partly introduced for social reasons, partly serve to simplify the taxation procedure. The maximum amount of the exemption is deducted up to the reference value, ie the deduction of the exemption cannot result in a negative value.

Allowances in German tax law

The most important allowances in German tax law are:

Income tax

Basic allowance : The basic allowance is the amount up to which no income tax is levied. It is part of the income tax rate . In the 2018 assessment period, it is 9,000 euros ( Section 32a (1) No. 1 EStG).

Saver flat rate : Investment income is only taxed (from 2009) if it exceeds 801 euros per year ( Section 20 (9) EStG).

Beispiel (bis 2008):
Einnahmen aus Kapitalvermögen (z. B. Zinsen)    10.000 Euro
./.Werbungskostenpauschale                          51 Euro
./.Sparerfreibetrag                                750 Euro
= Steuerbemessungsgrundlage                      9.199 Euro
= Einkünfte aus Kapitalvermögen

Beispiel (ab 2009):
Einnahmen aus Kapitalvermögen (z. B. Zinsen)    10.000 Euro
./.Sparer-Pauschbetrag                             801 Euro
= Steuerbemessungsgrundlage                      9.199 Euro
= Einkünfte aus Kapitalvermögen

Exemption for the sale of companies (steep): Section 16 (4) EStG, similar to Section 17 (3) EStG. Both allowances are reduced if the profit from the sale exceeds a certain amount, so that no tax allowance is granted in the event of high profits.

Exemption for private sales transactions § 23 para. 3 sentence 5 EStG

Child allowance according to § 32 EStG

Single parent relief according to § 24b EStG

Retirement benefit according to § 24a EStG

Training allowance according to § 33a Abs. 2 EStG

Lump sum for disabled people according to § 33b EStG

Exemption for income from agriculture and forestry in accordance with Section 13 (3) EStG

Exercise instructor allowance according to § 3 No. 26 EStG

Discount allowance according to § 8 Abs. 3 EStG

Pension allowance according to § 19 Abs. 2 EStG

Future security allowance according to § 3 No. 62–64 EStG

Inheritance tax / gift tax

Material allowances :
- § 13 ErbStG : Remaining tax-free: household effects up to a value of € 41,000 and other movable tangible objects up to a value of € 12,000, only for persons in tax class I (see below), otherwise only for a total of € 12,000. Certain other donations, e.g. B. for listed properties or similar.

Personal allowances § 16 ErbStG:
- Spouses and life partners: € 500,000
- Children and children of deceased children: € 400,000
- Children of the children: € 200,000
- other people in tax class I (including: parents and grandparents): € 100,000
- Tax class II persons (including: siblings, in-laws and in-laws): € 20,000
- Tax class III persons: € 20,000

These allowances apply for a period of ten years: All amounts received through gifts and / or inheritances within these ten years are added together. At the end of these ten years, another ten years begin with the same allowances.

Allowances for other types of tax

Trade tax : Partnerships and sole proprietorships are only charged for trade tax if their trade income exceeds € 24,500. The exemption takes into account the fact that partnerships and sole proprietorships are not allowed to deduct the entrepreneur's wages from profit , as corporations are allowed to do with managing director remuneration, even if the managing director is also a partner .

Corporation tax : tax exemption for certain corporations, § 24 , § 25 Corporation Tax Act

Allowances, exemption limits and lump sums for income-related expenses

A distinction must be made between exemptions and allowances for income- related expenses , which have similar objectives and effects.

Tax exemption vs. Exemption limit : While an exemption is still granted if the income exceeds the exemption, an exemption limit is then no longer granted.

Example : Exemption or exemption limit: € 100, income case a : € 90, case b : € 110.

taxable case a : € 0 in both cases

taxable case b : tax exemption: € 10 (€ 110 - € 100); Exemption limit: 110 € (since 110 €> 100 €).

From a legal point of view, the formulation for an exemption is e.g. For example: "are subject to taxation insofar as they exceed the exemption limit", whereas with an exemption limit: "... remain tax-exempt if they do not exceed the exemption limit ...". There is an exemption limit of € 600 for income from private sales transactions (speculative transactions) .

Tax exemption vs. Lump sum for income-related expenses : an allowance is granted after deducting income-related expenses, while a lump-sum income for income-related expenses is waived if you want to claim higher income-related expenses. Example: In the case of income of € 1,000 and expenses (business expenses, WK ) from case a : € 50, case b : € 200, an allowance ( FB ) and a lump sum for expenses ( WKP ) of € 100 each are granted.

Case a: to be taxed: € 1,000 - € 100 ( WKP ) - € 100 ( FB ) = € 800. Since the actual income-related expenses are lower than the lump sum, they cannot be applied; the lump sum is used instead.

Case b: to be taxed: 1,000 € - 200 € ( WK ) - 100 € ( FB ) = 700 €. Since the actual advertising costs exceed the lump sum, it can no longer be used.