private participation of a third party in received commission
February 13, 2020 | 25,00 EUR | answered by Steuerberater Knut Christiansen
Hello,
Scenario:
Person A is employed in an IT company. This company offers a commission for referring an IT professional (Person B). The commission (to Person A) is paid after Person B passes the probation period. The payment to Person A is taxed, so far so good. However, there is a (private) agreement between Person A and Person B. This agreement states that in the event the commission is paid to Person A, Person B will receive a percentage of it.
Now the question:
From a tax perspective, how does this transaction of payment from Person A to Person B behave? Is it still considered a referral commission (even though Person B is essentially being paid to "refer themselves")? Or is the transaction possibly to be considered independently and treated differently for tax purposes? In what context would such an agreement between Person A and Person B be categorized?
Good morning and thank you for using frag-einen.com. I would like to answer your question as part of the following assessment.
From A's perspective, taxable employment income is initially present. If A has to give part of the commission to person B based on an agreement, B has advertising costs in this context that he can claim, as these expenses are related to taxable income.
Person B receives a self-arranged commission, which is taxable for person B according to § 22 No. 3 EStG if the amount exceeds 256 EUR per year. These income would have to be declared by B in the tax return in annex SO line 10ff. It is advisable for both parties to settle the mediation in writing so that proof can be provided.
I hope this answers your question, otherwise feel free to ask for further clarification.
I would like to point out that this forum cannot replace personal advice, but only provides an initial tax assessment. Missing or incomplete information can change the legal outcome.
Best regards,
Knut Christiansen
Tax advisor
