Personal Tax Liability and (bisschen) material tax liability

Question 1

Taxable subject

Answer 1

The tax subject is the natural or legal person who is obliged by tax laws (e.g. to pay tax, file a tax return, etc.). The tax object and the associated tax liability are attributed to this person.
Each natural person receives a tax identification number that remains unchanged for the rest of his or her life. (§ 139b Fiscal Code).

Question 2

Taxable object / object of taxation

Answer 2

The tax object is the characteristic with which the tax standard links the tax liability. A tax object can be a transaction (e. g. transfer of assets), a condition (e. g. the keeping of a dog), or a thing (e. g. property).

Question 3

Tax debtor

Answer 3

Tax debtor is the natural or legal person against whom the main claim of the tax liability relationship is directed. The different tax laws define the tax debtor for each type of tax

Question 4

Tax payer

Answer 4

Generally, the taxpayer is the tax debtor. In exceptional cases, deviations may occur if the taxpayer pays the tax on behalf of another party (the tax debtor). For example, wage tax is paid by the employer to the tax office on behalf of the employee.

Question 5

Subject bearing the ultimate tax burden

Answer 5

This person is generally identical with the tax payer. In exceptional cases the person paying the tax is not the one bearing the tax burden (e.g. in the case of value added tax the owner of the business pays the taxes collected from the customer to the tax authorities but the customer bears the tax burden).

Question 6

Assessment basis

Answer 6

The assessment basis is the variable that quantifies the tax object (e.g. amount of taxable income, amount of trade income, value of the estate).

Question 7

Tax rate

Answer 7

The tax rate may be independent of the amount of the tax base (constant tax rate) or vary with its amount (variable tax rate). Progressive tax rates are used for personal income tax, whereas a constant tax rate is used for corporate income tax.

Question 8

Checking Scheme (Personal Income Tax)

Answer 8

I. Personal tax liability (§ 1 EStG)
II. Material Tax Liability (§ 2 I i. c. w. §§ 13 et seq. EStG)
III. Consideration of tax losses ( §§ 2 III, 10d EStG)
IV. Tax liability (§§ 32a et seqq. EStG)
V. Tax assessment (§§ 25 et seqq. EStG)

Question 9

Personnel/subject tax

Answer 9

Is tailored to the person and take the personal circumstances of the tax debtor into account.
> Family status
> Economic situation > etc.

Question 10

Income Tax

Answer 10

Based on the generated income

Question 11

Direct Tax

Answer 11

It is levied on the person who bears the economic burden of the tax.
Subject bearing the ultimate tax burden (natural person) = tax debtor
(natural person)

Question 12

Indicator for the ability to pay

Answer 12

Income

Question 13

Tax object

Answer 13

Generation of income

Question 14

Assessment basis

Answer 14

taxable income

Question 15

Unlimited tax liability

Answer 15

(sec. 1 par. 1 sentence 1 EStG): Subject to German taxation are all items of income, regardless of whether they are derived from domestic or from foreign sources → taxation of the worldwide income.

Question 16

Limited tax liability

Answer 16

(sec. 1 par. 4 EStG): Subject to German taxation are all items of income, if derived from domestic sources. Domestic sources are conclusively defined in sec. 49 EStG → taxation of the domestic income.

Question 17

Double taxation

Answer 17

> If a taxpayer is liable to tax in several states, double taxation may occur.
Avoidance of double taxation
through bilateral double taxation agreements
Allocation of the right to levy taxes on certain types of income to one state or another
The waiving state exempts income from tax or credits foreign tax against domestic tax
Unilateralmeasures,e.g.§34cEStG

Question 18

Taxation per time period

Answer 18

> Income tax is determined for a specific time period → Twelve-month period
The income determination period is usually the calendar year or the business year.
The business year may differ from the calendar year.

Question 19

Net principle

Answer 19

According to the net principle, only the income generated by a gainful activity as defined by the income tax law is taxed.

Question 20

Objective net principle

Answer 20

Reduction of income by expenses

operating expenses or income-related expenses

Question 21

Subjective net principle

Answer 21

The part of the income used for the essential living requirements must be excluded from the tax base (tax exemption of the subsistence minimum)

Question 22

Special expenses

Answer 22

> Costs typically arising for all tax subjects
Final enumeration in §§ 10 - 10b EStG
Examples
Church tax (§ 10 I no. 4 EStG)
Insurance contributions (§ 10 I no. 3 EStG)
Costs of vocational training up to 6,000 € (§ 10 I no. 7 EStG)
donations / member’s
contributions (§ 10b EStG)

Question 23

Extraordinary expenses

Answer 23

> Inevitable expenses incurred by a taxpayer, which are not incurred by the vast majority of taxpayers (§ 33 I EStG)
Examples
Medical costs (§ 33 EStG)
Maintenance payments (§ 33a EStG)

Question 24

Irrelevance of costs for private living

Answer 24

> The private lifestyle is generally irrelevant for the income determination
§ 12 EStG → no deduction of private expenditures
This also includes indispensable expenses for the private lifestyle. These are already covered by the exemption of the minimum subsistence level (basic allowance, special and extraordinary expenses). This also applies, for example, to bourgeois clothing used for work.
If costs are partly privately and partly caused by a gainful activity, a division rule applies. The part caused by the gainful activity is generally deductible. The part of the privately induced costs is not deductible.

Question 25

Objective characteristics

Answer 25

Generating income → Income is only taxable if it is earned through gainful activity (carrying out an activity in order to earn income).

Question 26

Subjective characteristics

Answer 26

Intention of realizing a profit (for income from profits) / Intention of realizing a surplus (for surplus income)