Germany Federal Fiscal Court Clarifies Deduction of Business Expenses for Guesthouses

The German Federal Fiscal Court Sept. 28 posted online Decision No. XI R 37/20, clarifying business expense deductions for guesthouses. The taxpayer was a recognized income tax assistance association that maintained advice centers. His center managers were freelancers not considered employees. The taxpayer rented two guesthouses in the building complex where his business was located, and provided them to the managers free for one week each. The taxpayer deducted the guesthouse expenses from corporate income tax, and deducted input tax for sales tax purposes. The Tax Office denied the deductions. The taxpayer filed the action, but the Finance Court below …