Ask a tax advisor on the topic of Profit and loss statement

Income from operations and depreciation

March 30, 2017 | 40,00 EUR | answered by Michael Herrmann

Five years ago, I switched to self-employment. During my self-employment, I used my existing car and depreciated it annually through the AFA (German tax depreciation method). Last year, I gave up my self-employment, and the private car was fully depreciated. Now the tax office wants to know the residual value of the car. Do I have to declare the residual value as profit according to the Schwacke list?

Michael Herrmann

Dear questioner,

first of all, thank you for your inquiry, which I would like to answer based on the information provided and in the context of your commitment within the scope of an initial consultation. The answer is given according to the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.

When closing a business, all assets that transfer to private assets are to be valued at their fair value. The fair value usually corresponds to the current market price. Taxable in the context of the cessation gain is the profit from the excess of the fair value over the book value. If the vehicle was depreciated to 0 €, the complete fair value would be taxable. Otherwise, it would be taxed accordingly less.

When determining the fair value, estimation is necessary as an actual sale has not taken place. The Schwacke list can be a benchmark, but it is not mandatory to use. Any reasonable estimation method that also includes the specific condition and equipment of the vehicle can be used. Perhaps you could simply get an offer from a dealer. This will usually be significantly below the Schwacke value.

I hope that with this information, I have given you a sufficient overview of the situation within the scope of your commitment and this initial consultation.

Sincerely,

Michael Herrmann
Diploma in Financial Management
Tax Consultant