Online Message –
Trade tax | Elimination of the extended reduction for real estate companies (FG)
For a GmbH that holds and manages its own real estate assets, the extended trade income reduction pursuant to Section 9 No. 1 Sentence 2 GewStG does not apply if it has acquired two vintage vehicles as an investment. This also applies if it has not sold the vehicles for many years and has therefore not generated any income from the vehicles in the disputed survey periods (FG Baden-Württemberg, judgment of March 28, 2023 – 6 K 878/22; appeal permitted ).
Background: Commercial partnerships and corporations are subject to trade tax. However, to the extent that such companies limit themselves to the management of their own property, the profit generated from this is completely exempt from trade tax to this extent due to the fact of the extended reduction, Section 9 No. 1 Sentence 2 GewStG.
Facts: The plaintiff is a GmbH that holds and manages its own real estate assets. The company’s fixed assets also include two vintage cars that were purchased as an investment with the intention of making a profit. To date, no income has been generated from the classic cars. In her trade tax returns for the years in dispute, the plaintiff applied for the extended reduction in accordance with Section 9 No. 1 Sentence 2 ff. GewStG, which the tax office rejected.
The FG Baden-Württemberg dismissed the lawsuit:
During the years of dispute, the FA rightly refused the extended reduction in accordance with Section 9 No. 1 Sentence 2 ff. GewStG.
During the years in dispute, the plaintiff did not meet the requirements for the extended reduction in accordance with Section 9 No. 1 Sentence 2 ff. GewStG.
All activities not mentioned in Section 9 No. 1 Sentence 2 GewStG are fundamentally harmful to cuts. Whether the activity is paid or unpaid is not important.
According to the stated standard purpose of the extended reduction of Section 9 No. 1 Sentence 2 GewStG, the legislature, in the Senate’s opinion, wanted to achieve exemption from trade tax only for asset-managing real estate companies in order to avoid a trade tax liability for them due to their legal form. It is in accordance with this standard purpose not to include other, possibly asset management activities – regardless of whether they are paid or unpaid. Even if, contrary to the defendant’s opinion, the holding of classic cars for the purpose of capital investment did not achieve the commercial character due to the lack of typical dealer behavior (see BFH, judgment of January 19, 2017 – IV R 50/14), this activity is considered to be of potential standard purpose harmful to the extended reduction.
The standard purpose contained in Section 9 No. 1 Sentence 2 GewStG to avoid double taxation of the same asset through property tax and trade tax does not require that unpaid activities – regardless of what kind – be viewed as harmless from the outset for the extended reduction. The current holding of classic cars as an investment shows that double taxation through property tax cannot have any effect here.
A notice:
The appeal was allowed due to the fundamental importance of the case.
Those:
FG Baden-Württemberg, judgment of. March 28, 2023 – 6 K 878/22 (GR)
Location(s):
NWB CAAAJ-58870