Turn of the year and 10 days deadline
Inflow/outflow principle
Pursuant to Section 11 (2) of the German Income Tax Act (Einkommensteuergesetz/EStG), regularly recurring expenses and income that are incurred or received shortly after the end of a calendar year must regularly be attributed to the previous calendar year to which they economically belong. A short time is considered to be a period of 10 days after the turn of the year. For example, if rental income is credited on Jan. 5, 2023, it must still be attributed to the calendar year 2022 and taxed. Accordingly, a tax-effective shift of regularly recurring expenses/income to the following year is only achieved upon payment or receipt after Jan. 10, 2023.
BFH case law
According to the ruling of the German Federal Fiscal Court (BFH, ruling of Feb. 16, 2022, X R 2/21), if an expense incurred by Jan. 10, 2023, is to be economically attributed to the previous calendar year 2022, it is further required that the payment is due a short time before the beginning or a short time after the end of the calendar year - i.e., within the 10-day period. The due date requirement is not met, for example - as in the case in dispute - if back sales tax payments for the months of May and June of the previous calendar year are not paid until January 10 of the following calendar year. This is because this tax claim was already due before the period from January 1 to January 10.
Conclusion
If various expenses made or income received in the following year are to be transferred to the previous calendar year for tax purposes, care must be taken to ensure that the due date is in the period up to January 10 of the following year. If various expenditures or receipts from the previous calendar year are not to be recognized for tax purposes until the following year, these expenditures/receipts must be made after January 10 of the following year.
Status: November 28, 2022
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