German Tax Updates in September 2025
- Accrual Unpaid Loan Interest to Controlling Shareholders
- Tax Authority to Estimate in Cases of Cash Management Deficiencies
- Tax Changes Regarding the Gross List Price and Depreciation of e-Vehicles
- The Unclear Line between Self-Employment and Employment
- Accrual Unpaid Loan Interest to Controlling Shareholders
A sole or at least controlling shareholder is deemed to have received a clear and undisputed claim against “their” corporation upon its maturity. This is because a controlling shareholder generally has the power to determine the timing of payments to themselves.
Facts of the Case:
In this case, the dispute was whether the controlling shareholder of a GmbH (Limited Liability Company) is considered to have “received” a matured claim against the company, even though the company had not made the payment due to financial difficulties.
Judgement Summary:
The Fiscal Court (FG) ruled that the controlling shareholder is deemed to have received a claim against the company upon its maturity. This rule of deemed receipt applies, at least, when the claim is clear, undisputed, due, and directed against a solvent company.
In this context, insolvency of the corporation means only the company’s permanent inability—due to a lack of funds—to meet its due monetary obligations. Such insolvency is generally denied prior to the “collapse” of the company, as long as no application for the opening of insolvency proceedings has been filed.
If the controlling shareholder has granted a loan to the company under a subordination agreement and the agreed loan interest has been recognized as a liability reducing taxable income in the company’s financial statements, but has not been paid out for years, the interest is still considered to have been received by the shareholder. This applies even if the company was in a financial crisis, as long as it was able to meet its obligations to other creditors and no insolvency proceedings were initiated.
The maturity of the loan interest is not altered by the agreed subordination if the subordination does not include a deferral agreement that would postpone the due date of the claim. Instead, subordination only affects the due date under insolvency law as defined in Section 17(2) sentence 1 of the German Insolvency Code (InsO). This must be distinguished from the maturity under Section 271 of the German Civil Code (BGB).
Under civil law, the “due date for payment” refers to the point in time when a creditor is entitled to demand payment. If the debtor delays payment, default interest may accrue, and the statute of limitations begins to run.
In contrast, under insolvency law, the “due date” signifies the point at which the assessment is made as to whether the debt collection should shift from individual enforcement to collective enforcement through insolvency proceedings.
A subordination clause (an agreement that prioritizes payments to other creditors) only becomes effective when the company is actually in a state of insolvency. Until then, it does not affect the due date itself or the creditor’s right to claim payment.
- Tax Authority to Estimate in Cases of Cash Management Deficiencies
In this case, a tax audit was carried out on a taxpayer who runs a cash-heavy snack bar with seating. The taxpayer was accused of deficiencies in how they handled cash transactions.
The Schleswig-Holstein Fiscal Court (decision dated August 28, 2023, case no. 3 K 25/22; appeal pending with the Federal Fiscal Court under case no. BFH X R 27/24) ruled that, given the potential for manipulation in electronic cash register systems, the mere absence of organizational or programming documentation for the register in use is a serious shortcoming. This alone gives the tax authorities the right to estimate taxable income.
The court also had no objections to the amount determined by the tax authorities using a standard rate estimate. It explained that comparing the business with similar operations using official industry benchmarks remains a widely accepted method, despite the questions and concerns raised by the Federal Fiscal Court (BFH).
Challenging Tax Estimates – A Common Task in Tax Defense
Practical Tip:
This case is a key example for tax advisors involved in defending clients during audits. Handling estimation issues and challenging the methods used by tax auditors is part of the everyday work of tax professionals.
In appeal case X R 19/21, the BFH already made it clear that it still has concerns and uncertainties about estimating taxable amounts based on official guidelines used in external business comparisons.
While this doesn’t necessarily mean that standard rate estimates will no longer be accepted, it raises the possibility that such estimates may be reduced in certain cases.
Importantly, in a more recent ruling dated October 4, 2024 (X B 105/23), the Federal Fiscal Court permitted an appeal, explicitly acknowledging the ongoing uncertainty surrounding this issue.
- Tax Changes Regarding the Gross List Price and Depreciation of e-Vehicles
On July 11, 2025, the Bundesrat approved the “Law on a Tax Investment Immediate Program to Strengthen Germany as a Business Location” (retrieval no. 249194). As a result, the tax treatment of motor vehicles without CO₂ emissions, e.g., pure electric vehicles or hydrogen-powered vehicles, is changing—specifically regarding the gross list price and depreciation.
Taxable Benefit for Employee Use
If an employer provides an employee with a company car without CO₂ emissions, also for private use, a taxable benefit in kind arises. For several years, the following has applied:
- When applying the one-percent rule, the gross list price (GLP) may be reduced to one quarter.
- When applying the logbook method, depreciation (AfA) or leasing payments may be reduced accordingly.
The prerequisite is that the vehicle’s GLP does not exceed a certain threshold. This threshold has been increased in recent years as follows:
- Acquisition after December 31, 2018: GLP threshold €60,000 (in effect since 2010)
- Acquisition after December 31, 2023: GLP threshold €70,000
- Acquisition after June 30, 2025: GLP threshold €100,000
If the threshold is exceeded, one half of the GLP must be applied as the assessment basis. The increased threshold applies for vehicles acquired after June 30, 2025.
A special rule applies to company cars: the relevant acquisition date is the date of first provision of the vehicle to the employee for private use (see para. 12 of the Federal Ministry of Finance letter dated June 5, 2014, ref. IV C 6 – S 2177/13/10002, retrieval no. 106294).
Example:
Employer A provides employee B with an electric company car on January 1, 2025, with a GLP of €98,000.
Solution:
Since the GLP exceeded the relevant threshold of €70,000 on the date of provision (January 1, 2025), the calculation basis is half the BLP. For electric company cars, the decisive date is the first provision to the employee.
Variation:
Employer A provides employee C with an electric company car for the first time on August 1, 2025. The car, with a GLP of €98,000, had been acquired in June 2025 and was used solely as a pool vehicle for business trips.
Solution:
One quarter of the GLP may be applied, since at the time of provision (August 1, 2025), the increased threshold of €100,000 (effective July 1, 2025) was applicable.
Note:
For VAT purposes (the benefit in kind constitutes a deemed supply subject to VAT), the full GLP must always be applied—even for an electric vehicle (Section 15.23 para. 5 no. 1 a) sentence 2 UStAE).
Improved Depreciation for e-Vehicles:
Furthermore, the legislator introduced an additional depreciation option for zero-emission electric vehicles in Sec. 7 para. 2a EStG, applicable to new acquisitions between July 1, 2025, and December 31, 2027. This improved depreciation does not apply to second-hand vehicles. Eligible vehicles may apply the following arithmetic-degressive depreciation with declining rates:
- 75% in the year of acquisition
- 10% in the first following year
- 5% in the second following year
- 5% in the third following year
- 3% in the fourth following year
- 2% in the fifth following year
The new depreciation rule applies from 2025 to all vehicles under Sec. 9 para. 2 KraftStG, regardless of vehicle class, e.g., passenger cars, electric commercial vehicles, trucks, and buses. The aim of this measure is to create an incentive for companies and entrepreneurs to purchase zero-emission vehicles. Employees, however, are unlikely to benefit from this depreciation.
For employees, depreciation of a vehicle is relevant only when the taxable benefit from private use is determined using the logbook method or when the so-called cost cap applies. In such cases, under current administrative practice, depreciation must be spread evenly (i.e., straight-line) over a useful life of eight years (BMF letter dated March 3, 2022, ref. IV C 5 – S-2334/21/10004:001, para. 34, retrieval no. 228043), and special depreciation allowed for employers may not be considered.
Important Note:
Even when employees claim the actual vehicle costs as travel expenses in their tax return for business trips using their own car, or when employers reimburse the actual vehicle costs tax-free, the costs—including depreciation—must be allocated over the useful life on a period-appropriate basis (Federal Fiscal Court judgment of September 3, 2015, ref. VI R 27/14, retrieval no. 180928).
- The Unclear Line between Self-Employment and Employment
The wide variety of ways in which a business relationship can be structured in detail often makes it difficult in practice to clearly classify it as either “employment” or “self-employment.” To avoid costly back payments of social security contributions with surcharges, a cautious yet precise classification should be carried out in good time.
Background:
In the construction industry, disguised self-employment has long been known. However, it is increasingly common in other sectors as well, such as tour guides, cleaners, fitness trainers, caregivers, publishing, logistics, and IT—often without the “client” paying contributions. The threat of back payments, including interest, and lawsuits over labor protection should encourage clients to check the employment status in good time.
For both parties—the client and the contractor—the distinction between self-employment and an employment relationship is not always clear. A particularly problematic aspect is that the criteria for differentiation are not identical in social security law, tax law, and labor law.
To begin with, “genuine” self-employed individuals must be distinguished: they have multiple clients, decide for themselves which assignments to accept under which conditions, and when, where, and how to work—usually in their own offices with their own equipment. “Genuine” employees, on the other hand, are easy to identify: under an employment contract, they are obliged to make their working time and labor available according to the instructions of the employer, especially regarding the time, place, and conditions of the work.
Note:
Between these “two poles” lies a broad gray area, which pension insurance auditors and judges at social courts assess based on the overall circumstances. The key focus is on entrepreneurial freedom of decision-making and the assumption of entrepreneurial risk.
Criteria for Differentiation:
Although the overall circumstances of each individual case are decisive, the following are classically examined in particular:
- Subordination: Does the client issue concrete instructions regarding the time, place, and manner of the work?
- Integration: Does the contractor use the client’s resources or their own, and to what extent are they organizationally integrated into the client’s business?
- Entrepreneurial Risk: Does the contractor bear their own economic risk?
Note:
Case law particularly tends to classify situations as disguised self-employment if the contractor performs the same activities as an employed worker, or if the contractor was previously employed as an employee. This applies even further if the contractor does not employ regular staff of their own.
Reminder:
Contracts should be formally correct, but disguised self-employment is determined not by the contractual label but by its actual implementation.
Consequences of Disguised Self-Employment:
The main issue lies in the obligation to pay social security contributions, with serious consequences for the client. The obligation begins, in principle, from the start of the “employment,” even if it is determined retroactively. This can lead to significant back payments, including late payment surcharges and, if applicable, criminal consequences.
Status Determination:
Legal certainty as to whether a relationship qualifies as dependent employment or self-employment is provided only by the status determination procedure (§ 7a SGB IV). It may be requested by either the client or the contractor.
Practical Tip:
The basis of the contractual relationship should not only be clarified at the outset. Even in a long-term business relationship, changes can arise that should be reviewed and assessed legally on a regular basis.
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.
