Wage tax and social security are at least as complicated as the taxation of the Mittelstands-GmbH. This is usually in the hands of tax clerks, who bear responsibility but are not allowed to advise alone. Up to more than 50 possibilities for tax-free or only flat-rate taxable benefits from the employer to his employees therefore remain unused – in each case completely exempt from social insurance.
Classic questions of incomplete fact-finding are those concerning the deductible maintenance for non-marital partners with a deduction potential of up to more than eight euros – or the question of medical costs; both of which are tax deductible as “extraordinary expenses”.
Anyone who is reduced in earning capacity as a result of a third-party-induced damage to health receives compensation for this, which is taxable as it replaces earned income. However, for the reduced ability to carry out unpaid household work, he receives a tax-exempt loss of budgetary management. Compensation for damages due to mobbing1 or violation of the Working Hours Act or other occupational health and safety regulations is also tax-free, as are compensation for pain and suffering and compensation for additional expenses, for example due to the need for care. The same applies to compensation for damages because the change from statutory to the less expensive private health insurance is no longer possible due to the damage to health, or only with risk surcharges, whereby the probable future amount of damages would have to be proven by an actuarial report.
Tax exemption in cases of discrimination, violation of occupational health and safety, bullying
Any compensation that does not involve compensation for wage payment is tax-free. This includes damages for discrimination on grounds of age, bullying or sexual harassment. Higher five-figure amounts may well be involved as compensation for immaterial damage – tax-free, of course. Only the replacement of taxable income 2 is liable to tax.
Taxable are therefore compensation payments due to reduced earning capacity, even if they come from an opposing insurance company3. Who perhaps by mistake has claimed only the net loss of income without taxes, must still pay taxes from it, likewise again on it, if these are refunded to him by the injuring party. The decisive factor is whether a concrete exchange of services exists – or whether the compensation for damages is to be seen as a substitute for it, as it were, and then is controllable4. Conversely, this means that compensation to the family for the loss of domestic labour by the employer may be tax-free.
Tax exemption for partial retirement, telephone, internet, computer and other
The law on part-time work for older employees allows top-up amounts to be paid; in addition, expenses for higher insurance with the statutory pension are possible – tax-free. The details are complicated – so the possibilities remain mostly unused. If employees also use their computers for business purposes, the reimbursement and private use would be tax-free – why would employees still buy PCs, tablets and smartphones for private use? This also applies to the use of Internet, DSL, fax, mobile phone, LTE, even at flat rate.
Maintenance as a tax-saving model
In general, alimony, marital and for relatives is generally tax-free5. There are also those of divorced persons which the payer can deduct – within limits, and the recipient then has to pay tax on them. This problem has almost been solved since about 2006, because postmarital maintenance is due for perhaps one to three years at the most – after that the spouses fall back on those professional opportunities that may have existed before marriage. Since then, the pharmacist’s divorce has been abolished with lifelong care at the level before the divorce – some divorcees nevertheless continue to pay to this day or have not had the care settlement recalculated since 2009, which may be cheaper.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.apotheke-und-marketing.de (published on 02.11.2018)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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