Net principle (tax law)

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According to the objective net principle , only net income, i.e. income after deduction of business expenses or business expenses, may be subject to income taxation in Germany. The subjective net principle prevents the tax on the subsistence level. The objective and subjective net principle are the result of the performance principle , which the Federal Constitutional Court derives from Art. 3 GG . According to this, the tax must be measured according to the individual financial capacity so that each taxpayer is only included in income tax to the extent that corresponds to his individual capacity. The net principle thus limits the tax legislature's leeway.

Objective net principle

principle

The objective net principle dictates that the taxpayer may deduct (= deduct) expenses that he spends to generate income from the income. Because only the remaining net income is actually available to meet private needs.

Examples of income-related expenses that are deducted from income include: B. Technical literature, tools, office supplies, application costs, training costs, interest on loans, the cost of traveling between home and work, additional expenses for double housekeeping.

Immediate constitutional rank

The Federal Constitutional Court has so far left open whether the objective net principle has constitutional status, because this has not yet been relevant to a decision.

According to the opinion represented in the literature, the type of income tax prescribed in the financial constitution according to Art. 106 GG and Art. 107 GG prohibits a structural conversion to a "gross tax" or an object tax, since the objective net principle as a type determining characteristic for income tax is identity-creating. In addition, there is further scope for the tax legislator.

Indirect constitutional rank

Taxation based on performance

According to the case law of the Federal Constitutional Court, the objective net principle is in any case the concrete legal form of the constitutional efficiency principle , and as such a basic decision that the legislature has to implement consequently. This means that basically all employment-related costs must be deductible. The constitutional conformity of exceptions to the objective net principle are measured against Article 3, Paragraph 1 of the Basic Law ( general principle of equality ). In the interests of constitutionally required tax equality, the legislature must ensure that taxpayers with the same ability are taxed equally high (horizontal tax fairness), while the taxation of higher incomes must be appropriate compared to the tax burden of lower incomes (vertical tax fairness). The measure of equality or inequality in taxation is the requirement of consistency . This principle says that the legislature has to avoid contradictions in judgment by building on its own basic decisions without contradiction. One of the basic decisions is the objective net principle.

Not every deviation from the objective net principle (unequal treatment) is also a violation of the constitution. The basic right of a taxpayer ( Article 3, Paragraph 1 of the Basic Law) is violated if there is no particular objective justification for unequal treatment. In individual cases, the following can be considered as special objectively justifying reasons:

  1. Promotion and control objectives for reasons of the common good. However, the funding and steering purposes must be designed to be equitable and be able to have an appropriate legislative structure. The intention to generate higher tax revenues is generally unsuitable as a justification.
  2. Individually designed peculiarities may not be taken into account here within the framework of a typifying generalization by the legislator. The typification must, however, be based on the broadest possible observation that includes all affected groups and subjects of regulation. The legislature must in no way take an atypical case as a standard; rather, it must use the realistic typical case as a standard.
  3. Fundamental (in turn constitutional) system change in the delimitation of business expenses and business expenses. A system change must be distinguished from the mere introduction of special provisions for a sub-area of ​​expenses; this is generally unsuitable as a justification.

Mixed effort problem

The employment-related nature of the effort is problematic if there is a private co-cause ( mixed effort ). In principle, the legislature is free to decide whether a breakdown into deductible expenses and non-deductible expenses is granted. However, according to the case law of the Federal Constitutional Court, the restriction applies that expenses determined by the obligation (or expenses that are not freely disposable) must be tax-deductible. Against the background of the subjective net principle, mandatory expenditure is, on the one hand, everything that is necessary to meet the subsistence level of the taxpayer and his family. In the area of ​​the objective net principle, necessary professional effort is to be regarded as a duty-related effort. In the area of ​​travel expenses to work, there is also a duty-related effort if the distance between home and workplace is influenced by the housing situation or consideration for the family ( Art. 6 GG).

“Below” the constitutional rank, the Federal Fiscal Court lifted a decade-long “prohibition of division” in the case of mixed causes by the decision of the Grand Senate of September 29, 2009 - with significant reference to the objective net principle. In certain cases, a work-related share of expenses can then be determined and deducted (see operating expenses ).

Jurisprudence

  • The restriction on the deduction of costs for a home office introduced by the Tax Amendment Act 2007 was declared unconstitutional by a decision of the Federal Constitutional Court of July 6, 2010. A study must at least always be tax-deductible if the taxpayer does not have another job available. The legislature was requested to remedy the unconstitutional situation with retroactive effect from January 1, 2007.
  • The abolition of the deduction for business expenses and business expenses for travel expenses to and from work (commuter allowance) by the Tax Amendment Act 2007 was declared unconstitutional by the judgment of the Federal Constitutional Court on December 9, 2008.
  • The limitation of the deduction of business expenses and business expenses for expenses for double housekeeping to a total of two years was declared unconstitutional by a decision of the Federal Constitutional Court of December 4, 2002.

Legal comparison

In European law and double taxation agreements , taxation on a net basis is regularly prescribed. It should be noted that the German legislature is increasingly disregarding the objective net principle, but is being forced by the European Court of Justice to tax on a net basis for cases with an EU foreign element. Foreign tax regimes are also regularly based on taxation on a net basis. A comparison made by the Heidelberg tax lawyer Ekkehart Reimer showed that in an international comparison there is hardly a country in which as few business expenses or business expenses deductions are possible as in Germany. This shows how much the German tax authorities have used their leeway in recent years to broaden the tax assessment base.

Subjective net principle

principle

In terms of the subjective net principle, the taxable ability of a taxpayer is measured according to his freely disposable income. What the taxpayer has to spend to secure his livelihood and that of his family is not freely disposable income. The tax exemption of the subsistence level is guaranteed as follows:

  1. Basic tax-free allowance: Income is tax-exempt at the level of the standard social assistance rate ("Hartz IV"). The basic tax-free amount doubles for spouses assessed together because they represent a community of needs.
  2. Objective net principle: The expenses associated with gainful employment are not taken into account in the social assistance rates and consequently in the basic allowance. These expenses are tax-deductible as business expenses or business expenses.
  3. Family benefits equalization: The costs associated with raising children and childcare are taken into account for tax purposes via child benefit or child allowance , education allowance , single parent allowance.
  4. To an extent that has not yet been further restricted under constitutional law, the reduction of the tax base through special expenses and extraordinary burdens also ensures that the subsistence level is tax-free

Constitutional rank

The subjective net principle is a constitutional requirement that is derived directly from the constitutional performance principle . The compatibility of income tax regulations with the subjective net principle is measured against Article 3 (1) of the Basic Law ( general principle of equality ), Article 1 (1) in conjunction with Article 20 (1) and Article 6 (1) of the Basic Law.

Jurisprudence

  • In a judgment of February 13, 2008, the Federal Constitutional Court ruled that the expenses of a taxpayer for health and long-term care insurance for the family are also part of the subsistence level, which is to be spared under income tax law. The previously only possible limited deduction of special expenses for health and long-term care insurance contributions is not sufficient to exempt the costs that have to be expended in order to guarantee the taxpayer and his family a welfare-equivalent health and long-term care provision. The Federal Constitutional Court instructed the legislature to ensure a (new) constitutional rule by January 1, 2010.
  • Judgment of the BVerfG of November 10, 1998:

“Parents' ability to perform is generally reduced by the need for care, in addition to the existential material needs and the work-related care needs of the child. The need for care as a necessary component of the family subsistence level [...] must remain unencumbered in terms of income tax. "

- BVerfG, 2 BvR 1057, 1226, 980/91, official guiding principle
  • In a judgment of May 29, 1990, the Federal Constitutional Court declared the 1982 cut in child benefit unconstitutional.
  • Judgment of the BVerfG of February 22, 1984:

"In income tax law, the legislature may not draw any unrealistic limits for the consideration of inevitable maintenance expenses."

- BVerfG, 1 BvL 10/80, official guiding principle
  • In a judgment of November 3, 1982 , the Federal Constitutional Court ruled that the childcare costs of single parents (at that time) were not sufficiently taken into account under tax law.

Web links

Individual evidence

  1. ↑ a b Stefan Breinersdorfer: Prohibition of deductions and the objective net principle - New tendencies in the constitutional control of the legislature . In: DStR , 49/2010, p. 2494
  2. ↑ Seer. In: Tipke, Lang: Steuerrecht , 19th edition 2008, §13 margin no. 103
  3. ↑ BVerfG, 2 BvL 1/07 of December 9, 2008. Paragraph no. (62)
  4. ↑ Monika Jachmann: The objective net principle as a supporting element in the overall system of tax law and the limit for tax policy . In: DStR , Heft 34, 2009, supplement, pp. 129, 130, with further references
  5. ↑ Hans-Erich Kiehne: Basic rights and tax regulations in the case law of the Federal Constitutional Court . CF Müller Verlag, 2004, ISBN 3-8114-5210-X , p. 30
  6. ^ Stefan Breinersdorfer: Prohibition of deduction and the objective net principle - New tendencies in the constitutional control of the legislature . In: DStR , 49/2010, p. 2493
  7. ↑ BVerfG, 2 BvL 1/07 of December 9, 2008. Paragraph no. (63)
  8. ^ Stefan Breinersdorfer: Prohibition of deduction and the objective net principle - New tendencies in the constitutional control of the legislature . In: DStR , 49/2010, p. 2494 ff
  9. ↑ BVerfGE 93, 121 148; BVerfGE 99, 280 296; BVerfGE 110, 274 293; BVerfGE 116, 164 182; BVerfGE 117, 1 32.
  10. ↑ BVerfGE 105, 73 113; BVerfGE 117, 1 33.
  11. ↑ BVerfG, 2 BvL 13/09 of July 6, 2010. Paragraph no. 47
  12. ↑ BVerfGE 84, 348 359; BVerfGE 87, 234 255; BVerfGE 96, 1 6.
  13. ↑ BVerfGE 116, 164 182 f.
  14. ↑ BVerfG, 2 BvL 13/09 of July 6, 2010. Paragraph no. 43
  15. ↑ Monika Jachmann: The objective net principle as a supporting element in the overall system of tax law and the limit for tax policy . In: DStR , Heft 34, 2009, supplement, p. 130 with additional information
  16. ↑ Monika Jachmann: The objective net principle as a supporting element in the overall system of tax law and the limit for tax policy . In: DStR , Heft 34, 2009, supplement, p. 132 with additional information
  17. ↑ BVerfG, 2 BvL 13/09 of July 6, 2010. Paragraph no. 41 ff
  18. ↑ Joachim Jahn: The fate of the commuter allowance depends on the "net principle" . In: FAZ
  19. ↑ BVerfG, 2 BvL 1/07 of December 9, 2008
  20. ↑ BVerfG, 2 BvR 400/98 of December 4, 2002
  21. ↑ a b Ekkehart Reimer: The objective net principle from a community law, treaty law and comparative law point of view . In: DStR , Heft 34, 2009, supplement, p. 128.
  22. ^ Roger Görke: Income tax and objective net principle , DStR , in: DStR , Heft 34, 2009, supplement, p. 108.
  23. ↑ Kussmaul: Business Taxation . 4th edition. Oldenbourg Wissenschaftsverlag, 2006, ISBN 978-3-486-57897-3 , pp. 258, 259.
  24. ↑ BVerfGE 82, 60 ; BVerfGE 87, 153 ; BVerfGE 107, 27 48; BVerfGE 112, 268 281.
  25. ↑ BVerfG, 2 BvL 1/06 of February 13, 2008, paragraph no. (104)
  26. ↑ BVerfG, 2 BvL 1/06 of February 13, 2008. Paragraph no. (107)
  27. ↑ BVerfG, 2 BvL 1/06 of February 13, 2008. Paragraph no. (103)
  28. ↑ ZDF: Judgment of the Federal Constitutional Court: Health insurance must be more deductible (tagesschau.de archive)
  29. ↑ BVerfG, 2 BvR 1057/91 of November 10, 1998
  30. ↑ BVerfGE 82, 60 .
  31. ↑ BVerfGE 66, 214 .
  32. ↑ BVerfGE 61, 319 .