1. Uncertainties regarding Real Estate Transfer Tax have been eliminated
2. Shareholder Managing Director : Private Use of Company Car is to be assumed
3. Meals from the Employer as Non-Cash Benefits will apply from 2024
4. New Income Limits for Parental Allowance (Elterngeld)
- Uncertainties regarding Real Estate Transfer Tax have been eliminated.
The law on partnerships was reformed with effect from 1 January 2024 by the Act on the Modernization of Partnership Law (MoPeG). This created uncertainties with regards to real estate transfer tax, which are now “off the table” thanks to the Secondary Credit Market Promotion Act.
Background
With effect from 2024, the MoPeG will result in significant changes to civil law for civil law partnerships and other partnerships. As with corporations, from 1 January 2024 there will be a strict separation of the asset spheres between the partnership and the shareholder.
Please Note:
The changes brought about by the MoPeG also have an impact on real estate transfer tax in particular. The Growth Opportunities Act was intended to change the status quo with its differing treatment of partnerships and corporations under real estate transfer tax law (particularly in the area of tax benefits under §5 and 6 of the Real Estate Transfer Tax Act (GrEStG)). It was envisaged that partnerships would continue to be treated as joint ownership for the purposes of real estate transfer tax.
This should give time for the federal government and the federal states to discuss the amendment to the Real Estate Transfer Tax Act. But now there was a problem: the Federal Council had stopped the Growth Opportunities Act in November 2023. The Mediation Committee was called upon. As no agreement could be reached in 2023, the worst-case scenario, i.e. taxation, was imminent from 1 January 2024 for corresponding real estate transfer tax issues. However, this could be prevented because the necessary adjustments have now been made to the Secondary Credit Market Promotion Act. This
means that everything remains the same (for the time being). For example, the son can be incorporated into a sole proprietorship and establish a general partnership with his father in the future without this transfer process triggering real estate transfer tax on the business property.
It is pleasing that the legislator has extended the initially intended transitional period from one year to three years. As a result, the property transfer tax concessions will remain in place at least until the end of 2026.
Further Information
Two further time-critical regulations from the Growth Opportunities Act were also implemented by the Secondary Market Promotion of Loans Act:
- The taxation of the so-called December 2022 aid for gas and district heating was waived, in particular to reduce the administrative burden on the tax authorities. As a result, Sections 123 to 126 of the Income Tax Act (EStG) have been cancelled.
- In addition, adjustments had to be made to the interest barrier regulation. This is because the interest deduction restriction (Section 4h EStG and Section 8a of the Corporate Income Tax Act) had to be adapted to the requirements of the ATAD (Anti-Tax Avoidance Directive) by 31 December 2023.
- Shareholder Managing Director : Private Use of Company Car is to be assumed.
If the employer wants to do something good for an employee for the benefit of both parties, there are various options. For example, they can issue a petrol voucher or provide a company car. In principle, a managing partner of a corporation is also an employee. Like everyone else, they can be provided with a car either only for journeys between their home and place of work or also for other private journeys, such as on holidays. If a ban on private use has been imposed, the employee does not have to pay tax on any non-cash benefit for private journeys. But does this also apply to a sole shareholder managing director?
The Münster Finance Court (FG) had to decide this. The plaintiff, a GmbH, agreed with its sole managing director A that he was entitled to a company car in the upper middle class. However, he was not allowed to use this car privately. The GmbH made a claim for the newly acquired car was subject to special depreciation and private use was not recognized. However, the tax office applied a proportion for private use (1% rule) and did not recognize the special depreciation as the presumed private use meant that the car was not used (almost) exclusively for business purposes. The action before the tax court was unsuccessful. In the case in dispute, the prima facie evidence was in favor of private use despite the prohibition and led to a hidden profit distribution at A.
General life experience suggests that a shareholder managing director also uses a vehicle provided to them by the company for private purposes. This also applies in the case of a ban on private use if no organizational measures are taken to exclude private use.
The Senate has thus not followed the previous case law according to which no private use is to be assumed if this was contractually prohibited. According to them, prima facie evidence is supported by the fact that even in the event of a ban on private use, there would be no consequences for A under company law or labor law due to the lack of a conflict of interest.
- Meals from the Employer as Non-Cash Benefits will apply from 2024.
Many employees appreciate it when they receive a free or discounted meal in the company’s own canteen during their lunch break. However, such benefits in kind are not tax-exempt, but must be recognized as a non-cash benefit, so that they are added to the salary subject to income tax and social security contributions.
For the year 2024, the Federal Ministry of Finance has now announced the new non-cash benefit values for free and discounted meals. The purpose of these official values is to simplify payroll accounting. This means that the employer does not have to determine the actual costs of meals on a weekday but can use lump sums as a basis. These also apply to meals provided to the employee by the employer or by a third party at the employee’s instigation during a work-related external activity or as part of a double household, provided that the price of the meals does not exceed €60.
The value of a breakfast has now been set at €2.17 (2023: €2), and the value of lunch and dinner at €4.13 per calendar day (2023: €3.80). For full board, a flat rate of €10.43 now applies per day (2023: €9.60).
If the employee’s meals are free of charge, the corresponding non-cash benefit value is recorded as a non-cash benefit in the salary account. If the employee receives a discounted lunch in the company canteen, e.g. for €3, the difference between the non-cash benefit value and the meal price (i.e. €1.13 in 2024) is to be recognized as a non-cash benefit for the employee. If the employee has to pay €4.13 or more for their food, there is no longer any non-cash benefit.
Since the benefits in kind are usually lower than the actual cost of the meal, employers can save on non-wage labor costs by providing their employees with regular meals. If they were to pay the expenses for the food as wages, the costs would be higher. This additional benefit to the salary is therefore of equal interest to employees and employers.
- New Income Limits for Parental Allowance (Elterngeld).
The Budget Financing Act 2024 reduces the income limit up to which parental allowance (Elterngeld) can be claimed. The Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSFJ) has summarized the new regulations as follows:
For births from 1 April 2024, the limit of taxable annual income (income limit) above which the entitlement to parental allowance ceases to apply for joint parental allowance recipients has declined from EUR 300,000 to EUR 200,000.
On 1 April 2025, it will be lowered again for parents to EUR 175,000. For single parents, an income limit of EUR 150,000 will apply from 1 April 2024.
In addition, the possibility of receiving parental allowance at the same time has been reorganized. In the future, it will only be possible to receive basic parental allowance (Basiselterngeld) for the child’s 12th month of life.
There will be exceptions to the simultaneous receipt of Parental Allowance Plus (Elterngeld Plus), the partnership bonus (Partnerschaftsbonus) and in the case of multiple births and premature births.
Please Note:
Further information on parental allowance (including a parental allowance calculator) can be found on the website of the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth. BMFSFJ – Startseite
Disclaimer: All views expressed in this article are solely for informational purposes and should not be construed as legal advice. This information is for reference only and is bound to change in case of any amendments or changes to applicable laws. We do not assume any responsibility or liability for any errors or omissions in the content of this article, and do not make any warranties about the completeness, reliability and accuracy of the information expressed in this article.
