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

record tax-exempt cash receipts

September 14, 2020 | 25,00 EUR | answered by Steuerberater Knut Christiansen

Hello, I work for a consumer protection organization. During on-site consultations, I receive X€ in cash from customer as a co-payment (own contribution). This amount is tax exempt. Normally, I would book these X€ as a "pass-through item" and pass them on to the organization. To avoid additional work, I am asked to keep the X€ and deduct them in my invoice to the organization. So, I receive money from the customer, which I keep (income), and the rest from the consumer protection organization (which then pays my invoice from federal funds).

Question: How do I book these X€ in the income statement (journal entry)? My own solution would be to book the income to account 8100, "other tax-exempt sales". This would have the advantage that I do not book the tax unlawfully and at the end of the year, I can properly prove the 30€ to the tax office for taxation at my individual tax rate. Solution? Thank you very much!

Steuerberater Knut Christiansen

Good day and thank you for using frag-einen.com!

Basically, your suggestion for booking is correct, as in the end you will be taxed the same amount (just like if you were to pass the money on to the organization and they then pay your invoice in full). Assuming that your services to the organization are also VAT exempt, you can book the amount to 8100 (e.g. private withdrawal to 8100).

However, if your services to the organization are subject to VAT, then you would need to book to 8400 or a similar account.

I hope this answers your question, if not, please feel free to contact me with your follow-up question.

Kind regards,

Knut Christiansen
Tax advisor