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Greenhouse construction and plant breeding are independent businesses (FG)

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Online message – Thursday, February 15, 2024

Trade tax | Greenhouse construction and plant breeding are independent businesses (FG)

Anyone who breeds and trades plants in addition to building greenhouses maintains different businesses, with the result that for trade tax purposes, losses from plant breeding cannot be offset against profits from greenhouse construction (FG Münster, judgment of November 29, 2023 – 13 K 986/21 G; revision not permitted).

facts: The plaintiff ran a business with which he carried out the planning, project planning and construction management of greenhouses. He also registered another business that was concerned with the breeding of artificially propagated rare plant species sourced from abroad and the creation of new hybrids for online shipping. He calculated the profit for both areas as part of a standardized accounting system.

As part of an audit, the tax office came to the conclusion that there were two independent commercial businesses. It made a distribution of profits, which resulted in a loss for plant breeding. Accordingly, it set the trade tax base amount for greenhouse construction without taking these losses into account.

In support of his lawsuit against this, the plaintiff stated that both areas represented a single commercial operation. Plant breeding and the resulting plant trade only served as an auxiliary and secondary business to greenhouse construction, because the planning of greenhouses for commercial plant breeders, tropical greenhouses and research companies requires special plant expertise. There is also an organizational connection, as an employee and the technical infrastructure are deployed in both areas.

The 13th Senate of the FG Münster did not follow this and largely dismissed the lawsuit:

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Greenhouse construction is a commercial activity and plant breeding is an agricultural and forestry activity are not economically linked to one another in such a planned manner that they can be viewed as a single commercial enterprise.

Plant breeding is not just an auxiliary activity to greenhouse construction. There is no need for the other activities, since competing companies do not always also carry out plant breeding.

In this specific case, plant breeding does not provide any preliminary products or necessary additions to greenhouse construction. It is also not designed in such a way that the greenhouse construction is targeted at customers, because the plaintiff primarily offers the plants to private customers (B2C business), while the greenhouse construction is aimed at corporate customers.

The biological knowledge gained by the plaintiff from plant breeding is a company-related circumstance that is fundamentally not taken into account when considering whether the two areas support and complement each other.

Furthermore, even after the Senate took evidence by questioning witnesses, it is not apparent that plant breeding provides the necessary know-how for greenhouse construction.

Due to the division of profits between the two areas differing from the tax office, the Senate approved the lawsuit to a limited extent.

A notice:

The court did not allow the appeal. The full text of the decision is in the
Case law database of the state of North Rhine-Westphalia published.

Those: FG Münster, Newsletter February 2024 (il)


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