Checking Scheme PIT

Question 1

Whats the (Short) checking scheme for PIT?

1.
2.
3.
4.
5.

Answer 1

1. Personal Tax Liability (§1 EStG) -> who pays PIT?
2. Material Tax Liability (§2 | i.c.w. §§ 13 et seq. EStG) -> What is taxed?
3. consideration of tax losses (§§2 III, 10d EStG) -> what is taxed?
4. tax liability (§§32 a et seqq. EStG) -> what is the amount of tax to be paid?
5. tax assessment (§§25 et seqq. EStG) -> what is the amount to be paid?

Question 2

Pararaph and content:
I. Personal tax liability

(2)

Answer 2

§1 EStG
Check whether unlimited or limited tax liability

-> unlimited (§1 | 1 EStG): natural person, residence OR habitual place of abode in domestic territory
= if fulfilled, the world income is subject to tax

-> limited tax liability (§ 1 IV EStG)
-> natural person, without residence NOR habitual place of abode in domestic territory
= if fulfilled, the tax liability is limited to the income derived from domestic sources

Question 3

Paragraph and content:

II. Material Tax liability

1. (7)
2. (2)

Answer 3

(§§2, 13 et seqq. EStG)
Check: 1. what is the type of income?

i. income from farming and forestry

ii. income from business operations (1. independence, 2. sustainability, 3. intention to realize profits, 4. participation in general commercial traffic, 5. no income from self employment, 6. no income from mere asset administration)

iii. income from self employment

iv. income from dependent employment

v. income from capital investments

vi. income from rental and royalties

vii. other income

Check: 2. does the type of income belong to the profit or surplus types of income?

i. profit types of income (determined by cash flow accounting method or determined by accrual accounting method)

ii. surplus types of income

Question 4

Material Tax Liability

1. Whats the type of income?
   -> ii. income from business operations
   -> iii. income from self employment

Answer 4

ii. check whether all 6 are met: 1. independence, 2. sustainability, 3. intention to realize profits, 4. participation in general commercial traffic, no income from self employment, no income from mere asset administration

iii. check whether all are met:
1. conditions 1-4 from ii. are met
2. deployment of own manpower based on own expertise, acting executive and autonomour
3. is there a catalogue profession, adjective profession or a similar profession within the meaning of §18 I No. 1 EStG?

Question 5

Material Tax Liability

1. Whats the type of income?
   -> iv. income from dependent employment
   -> v. income from capital investments

Answer 5

iv. check if all are met:
1. person is or was employed in public or private sector
2. is there an employment relationship: employee owes his labor/ must follow instructions

v. check: if 1. is fulfilled and 2. not, the income is income from capital assets. if 2. is fulfilled, check the type of income to which the income is to be assigned to
1. is it recurring icnome or one off gains/ losses from a sale? (a. is it dividend or interest income (§20) or b. is it a profit/loss from the sale sof shares?)
2. is the income attributable to another type of income (§20)?

Question 6

Material Tax Liability

1. Whats the type of income?
   -> vi. income from rentals and royalties
   -> vii.

Answer 6

vi. Check: if 1. is fulfilled and 2. not, the income is income from rent or lease. if 2. is fulfilled, check the type of income to which the income is to be assigned to
1. is it recurring icnome or one off gains/ losses from a sale? (a. is it rental/lease income from property or building b. from transfer of a right? c. is it non recurring income, i,e, gains/losses from the sale of land, buildings or rights (§22)
2. is theincome attributable to another type of income?
vii. 1. is it recurring income or one off gains/losses from sale?; are the gains/losses from the sale of land, building or rights?; is it real estate/building or are they any other assets?(§20)

Question 7

What are the five main steps in the PIT examination scheme?

1.
2.
3.
4.
5.

Answer 7

1. PTL (§1 EStG)
2. Material Tax Liability (§§2, 13 et seqq EStG)
3. Consideration of Tax losses (§§ 2 III, 10d EStG)
4. Tax liability (§§32a et seqq)
5. Tax assessment (§§25 et seqq)

Question 8

What determines the unlimited tax liability? (§1 | 1 EStG)?

1.
2.
3.

Answer 8

✅ Natural person (§ 1 BGB)
✅ Residence (§ 8 AO) or habitual place of abode (§ 9 AO)
✅ Located in Germany
➡ If met, worldwide income is taxable.

Question 9

What determines the limited tax liability? (§1 IV EStG)?

Answer 9

✅ Natural person (§ 1 BGB)
✅ No residence (§ 8 AO) and no habitual place of abode (§ 9 AO)
✅ Domestic territory
➡ If met, only territory-sourced income is taxable.

Question 10

What are the 7 types of taxable income under the Material Tax Liability?

Answer 10

1. Income from farming and forestry (§ 13 EStG)
   
   2. Income from business operations (§§ 15 ff. EStG)
   3. Income from self-employment (§ 18 EStG)
   4. Income from dependent employment (§ 19 EStG)
   5. Income from capital investments (§ 20 EStG)
   6. Income from rental and royalties (§ 21 EStG)
   7. Other income (§§ 22 et seqq. EStG)

Question 11

What are the key conditions for income from business operations?

1.
2.
3.
4.
5.
6.
7.

Answer 11

(§15 EStG)

1. Independence (own responsibility & risk)
   
   2. Sustainability (continued or repeated activity)
   3. Profit intention (income > expenses)
   4. Market participation (visible economic activity)
   5. Not self-employment (§ 18 EStG)
   6. Not mere asset administration (§ 21 EStG, § 14 AO)

Question 12

How is income from self employment determined? (§18 EStG)

1.
2.
3.
4.

Answer 12

✅ Fulfills criteria (1)-(4) of business operations (Independence, Sustainability, Profit Intention, Market Participation)
✅ Uses own expertise & works autonomously
✅ Falls under catalogue, adjective, or similar professions (§ 18 I No. 1 EStG)

Question 13

How is income from capital investments determined?

1.
2.
3.

Answer 13

(§20 EStG)

1. Recurring income or one-time gains/losses
   
   2. Examples: Dividends, interest, share sales (§ 20 I, II EStG)
   3. Check if income belongs to another type (§ 20 VIII EStG)