How to register: Photovoltaics and two other businesses
July 1, 2011 | 20,00 EUR | answered by StB Manuela Ponikwar
Hello,
I need advice regarding the division or registration of my "businesses".
The situation is as follows:
- I am employed full-time.
- I work part-time as a financial advisor with the small business regulation (max. turnover of 2000,-EUR per year).
- my wife runs a nail studio, which is registered in my name (same small business regulation, turnover of approximately 5000,-EUR per year).
- this has two reasons: 1) my wife can remain insured with me in the family insurance and 2) I also do the "bookkeeping", etc. so I am in a sense the "entrepreneur" of both of us.
The question now is:
I want to install a photovoltaic system. This usually involves sales tax and therefore does not work with the small business regulation.
Operating the nail studio with sales tax in its current size is also not cost-effective.
What is the best solution now?
Should I leave everything as it is and let the PV system run with sales tax under my wife's name?
Should I transfer the nail studio to my wife and let the PV system run under my name (the financial consulting is income-wise anyway exempt from sales tax)?
Thank you for your feedback.
Dear seeker of advice,
Thank you for your inquiry, which I would like to answer in the context of an initial consultation considering the appropriate fee as follows:
1)
I would like to point out that registering your wife's activity in your name is fraud. I cannot answer whether this could have legal consequences in terms of commercial or civil law.
However, the assessment in tax law is completely independent of the commercial assessment. Basically, your wife generates income with a sustainable activity with the intention of making a profit. In terms of turnover and income tax, you are the entrepreneur, as you carry out the specific activities for the business and must pay taxes on them. The fact that your wife has outsourced administrative tasks does not change your status as an entrepreneur.
You have not caused any harm to the tax office - as long as you are jointly assessed - because you have only declared the revenues under the wrong spouse, but there could be consequences in terms of social security. These consequences could range from retroactively excluding your wife from family insurance including the repayment of payments made.
By the way, your wife can remain in family insurance if you declare her activity as a sideline (i.e. your wife works less than 18 hours per week and earns less than 365 EUR in profit per month). A sideline does not mean that your wife also has to have a main job.
In conclusion, I strongly recommend correcting the registration of the activity.
2)
The PV system can generally be operated under the small business regulation like other activities. However, it is usually not advisable to do so, so (despite low profits) opting for the standard taxation is recommended (i.e. voluntarily declaring and paying VAT). The reason is that you can only claim input tax with standard taxation, which is not insignificant when purchasing a PV system.
Now you have the financial advisory service as a small business and your wife has the nail salon as a small business, and neither of you wants to opt for standard taxation and subject all other revenues to VAT.
What you can do is establish a GbR (civil law partnership) for the operation of the PV system between both spouses. This is essentially done through a partnership agreement between the two of you. The registration in the commercial register may not be necessary given the likely scope of the GbR's activities, but this should be clarified on a case-by-case basis.
With the establishment of the GbR, a partnership is subject to income tax assessment. The shareholders owe income tax, which is distributed proportionally to the profit shares (as part of a unified and separate determination of the GbR's profit) and then assessed for personal income tax.
For VAT purposes, the GbR is the entrepreneur and also receives a separate VAT number. To start the activities of this partnership, you should notify the tax office and opt for standard taxation with the GbR for VAT.
I hope this information is helpful to you.
Best regards,
Manuela Ponikwar
Tax consultant
www.ponikwar.de
