In addition to yesterday's question Taxation of employees - balance sheet
March 14, 2012 | 20,00 EUR | answered by Andreas Schupp
Why is it ignored in tax valuation that the status determination of the German pension insurance has shown that the shareholder is not an entrepreneur? This shareholder, who works in the company, also only has a 7/48 share. Why is this considered as profit in the balance sheet? If the company is in the red and the alleged shareholder receives a salary, these are costs because there is no profit from which it can be taken. The shareholder is also not an entrepreneur according to the definitions!
Dear inquirer,
Thank you for your inquiry, which I will gladly answer taking into account your input and the rules of this platform.
Please note that my explanations are based on the facts presented by you, and that any modifications of any kind or ambiguity of the information provided can affect the correct tax result.
Please note that for professional reasons I am unable to address legal questions.
In the aforementioned situation, the taxpayer automatically became a co-entrepreneur of a partnership as an heir to the former entrepreneur's estate, as he was one of four heirs to the assets.
A co-entrepreneur generates income from a business operation by law (§ 15 paragraph 1 no. 2 Income Tax Act).
Payment of a salary is not possible in sole proprietorships and partnerships. Money is taken out as profit in advance by withdrawal. If this withdrawal is assigned to him as remuneration for his services by a social agreement, this remuneration is considered part of his profit share in the partnership.
From this profit share, he then pays social security contributions as well as possible advance income tax payments, etc.
If the company incurs losses, the partner of the partnership is assigned the loss according to his share in the partnership. However, an activity remuneration as an advance reduces the loss.
Regarding the question of whether a partner is an entrepreneur, the following answers apply:
1) A shareholder of a corporation (GmbH, AG, etc.) is not an entrepreneur, but the corporation itself. Therefore, this shareholder can receive a salary as an employee.
2) Shareholders of a partnership are usually considered co-entrepreneurs, as they have co-entrepreneurial initiative (participation in decisions) and co-entrepreneurial risk (participation in losses).
The determination by the pension insurance has nothing to do with accounting. Different standards apply in social security law. This primarily concerns the question of mandatory insurance in the pension insurance.
I hope my explanations have been helpful to you and remain
Yours sincerely,
Andreas Schupp
TAX CONSULTANT
