Ask a tax advisor on the topic of Annual financial statement

Profit and Loss Statement - Correction of Personnel Costs

March 14, 2018 | 25,00 EUR | answered by Steuerberater Bernd Thomas

Dear Sir or Madam,

I am seeking an answer to the following question regarding the income tax return, attachment EÜR:
I am a self-employed architect and cash basis accountant. In 2017, I made two mistakes in the payroll for an employed architect, which were only noticed in 2018 during my year-end accounting.

1. I overpaid my employee by nearly 80 euros in September 2017. He refunded me this amount in March 2018.

2. The employee is insured for retirement at a pension fund. In March 2018, I corrected the contribution collection for September 2017 and will receive a refund of around 30 euros in 2018.

My question: Which salary and social security contributions do I include in my operating expenses for 2017 or in attachment EÜR? Can I include the actual contributions paid as operating expenses in 2017 and consider the refunds in 2018, or can I only include the legally correct amounts as operating expenses in 2017 and book the refunds as neutral in 2018?

I look forward to your response.

Steuerberater Bernd Thomas

Dear inquirer,

I am happy to answer your question based on the information provided.

As a cash basis accountant, your profit determination is based on the principle of inflow and outflow. This means that (with few exceptions) your business expenses are always to be allocated to the year in which they have flowed out (payment), not in the year of economic causation.

The overpayment of salary is therefore a business expense in the year 2017. Likewise, the actual employer contributions to the pension fund are business expenses in 2017.

The reimbursements represent business income in the year 2018, which should be taken into account in the cash basis accounting for 2018.

Best regards,

Bernd Thomas
Tax advisor