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Is the technology founder scholarship tax-free or taxable?

February 12, 2022 | 50,00 EUR | answered by Steuerberater Knut Christiansen

We have received the SAB Technology Start-up Scholarship and now have different statements regarding the tax exemption or taxation of the scholarship. We would like to clarify this question once and for all.

Here are the details of the funding:

1.) It is the Technology Start-up Scholarship from the SAB (Saxon Development Bank). It is a start-up scholarship with the purpose of pursuing one's own start-up project.
2.) The funding amount is 2,500 € per month and is granted for 12 months (totaling 30,000 €).
3.) The funding notification explicitly states that it is a "subsistence allowance".
4.) The funding provider includes the ESF (European Social Fund).

So, the question is, is it taxable income or does it fall under the subsistence allowance [§3 No. 44]?

Steuerberater Knut Christiansen

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

Regarding your inquiry, I would like to provide you with the following feedback.

In general, it can be assumed that the scholarship falls under § 3 No. 44 EStG, as long as it is paid solely to cover living expenses and no consideration is owed (in the sense of § 3 No. 44 EStG).

It is recommended that you mention in the tax return under "Additional information for the tax return" that you have not declared the money received from the scholarship, as you assume it is tax exempt under § 3 No. 44 EStG. The tax office may request the funding commitment again and then assess it accordingly.

Please note that this forum cannot replace personal advice, but only allows for an initial tax assessment. In your case, it would be important to review the entire funding decision and guidelines. This is not easily achievable in an online consultation or would "exceed" the scope of the consultation.

Best regards

Knut Christiansen
Tax advisor