Deduct tax consultant costs: New judgment!
Tax consultant costs as disposal costs: Hessian tax court rules in favor of taxpayers
In a recent ruling (case no. 10 K 1208/23), the Hessian Tax Court (Hessisches Finanzgericht – FG) decided that tax consultant costs for determining the capital gain are deductible as disposal costs in accordance with Section 17 of the German Income Tax Act. This contradicts the view of the Federal Fiscal Court, which previously only wanted to allow expenses that were directly related to the sale. Section 17 of the Income Tax Act regulates the tax liability on the sale of shares in corporations.
What does this mean for taxpayers?
According to the ruling, all costs incurred as a result of the disposal process are deemed to be disposal costs – including the tax consultancy costs incurred to calculate the capital gain. The tax office had initially rejected these costs, but the tax court clearly rejected this view.
Why is this relevant?
Tax consultancy costs incurred when determining the surplus of operating income over operating expenses can therefore reduce profits. This could provide financial relief for many self-employed people and entrepreneurs.
Conclusion
This ruling offers taxpayers an opportunity to reduce their tax burden. However, as the case is still pending before the Federal Fiscal Court, taxpayers should continue to try to deduct the relevant costs and keep a close eye on legal developments. If the tax office does not accept this, keep the proceedings open. This will allow you to benefit from a potentially positive ruling in the last instance. The best way to do this is with the PepperPapers sample objection.
