Distribution of profits at GSG differs from the ownership structure.
March 17, 2011 | 50,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
I have bought a property with holiday homes with my partner.
1. Tax office assumes that it is income from a business operation, and not rental income!
Regarding 1: Accommodation is not provided. Bed linen and towels only if forgotten (emergency supplies). I have filed the VAT return, a refund would be due!
2. Tax office does not agree to any other distribution ratio other than the existing 50:50 in the land register.
Regarding 2: Partnership agreement for changing the distribution ratio is available, the changed distribution ratio was based on the actual investment costs taken over.
My research indicates that I am correct (hopefully), but I am lacking arguments (laws, rulings) to support my position.
Thank you in advance.
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your commitment in a first consultation as follows:
VAT assessment:
The civil law partnership or GbR or property community is an entrepreneur within the meaning of § 2 paragraph 1 UStG. It does not matter whether there are income from business operations or income from rental and leasing for tax purposes. The crucial factor is that the property community is the landlord and therefore an entrepreneur, making taxable supplies within the meaning of § 1 UStG. Therefore, you must not confuse VAT entrepreneurship with income tax entrepreneurship. Here, the UStG strictly differs from the EStG.
Income tax assessment:
For income tax purposes, a business operation exists if ALL of the following conditions are simultaneously fulfilled:
1. The holiday home must be fully furnished.
2. The holiday home must be located in a pure holiday area.
3. Advertising and administration must be conducted by a holiday organization.
4. The holiday home must be kept available for rental at all times, and personnel must be present, similar to a hotel reception, to also conclude rental agreements.
By providing additional services such as towels, etc., the tax office assumes a hotel or guesthouse-like rental, which could refer to the decision of the Federal Fiscal Court dated January 14, 2004 - X R 7/02 (NV). The guiding principle of this decision is as follows:
1. The rental of a holiday apartment outside a holiday resort constitutes a business operation if it is comparable to an accommodation business (hotel). For hotels, the frequent change of guests is characteristic. Providing premises for immediate, even short-term rental to guests requires material and personnel arrangements, as is not associated with the rental of apartments (hotel-like offer).
2. The commercial nature can also result from the landlord providing additional services that require entrepreneurial organization, which is not necessary with property management through apartment rental alone but is necessary in running a guesthouse.
If you only occasionally provide bed linen and towels, this alone may not lead to a commercial classification. In the case of the decision, additional bus trips and a pick-up service from the train station were also conducted, and a manager was hired. It depends on the individual case here.
In principle, in your case, the income is distributed according to civil law principles, in this case, fractionally with 50% each. However, if one co-owner has taken over the financing, special advertising costs may be present, which are fully attributable to you. However, for a definitive statement, your agreement would need to be examined in detail, so I cannot say whether the tax office is correct.
I hope I could be of assistance.
Best regards,
Ulrich Stiller
Tax consultant/Diplom-Betriebswirt
