Trade tax addition of maintenance costs for leasing contracts – Beware of the trade tax trap!

The BFH (III R 33/21) has ruled that maintenance costs that are contractually passed on to the lessee are part of the “leasing rate” and, pursuant to Sec. 8 No. 1 lit. d) GewStG are to be added for trade tax purposes.

Decision of the BFH

Expenses incurred by an entrepreneur, e.g. for leased vehicles are subject to trade tax additions, as they are rental expenses for movable assets. Accordingly, the monthly lease payments must be taken into account in the business tax return. It was now questionable whether expenses for maintenance and wear and tear, which are not borne by the lessor but by the lessee, are also subject to trade tax additions.

The BFH affirms this with reference to earlier case law as well as to civil law provisions of tenancy law. According to this, the lessor (or lessor) must provide the leased item in a condition suitable for use in accordance with the contract and maintain it in this condition during the lease term. The exclusion of maintenance costs from the lease agreement must therefore be expressly regulated. Accordingly, from an economic point of view, differences in the monthly leasing rate are likely to arise for leasing contracts incl. or excl. the assumption of expenses for maintenance & wear and tear.

It is simply not compatible with uniformity of taxation if the payment for maintenance is treated differently depending on whether it is included in the lease payment or paid separately. This is understandable in this respect, but presents entrepreneurs with particular challenges in practice.

Consequences for practice

Entrepreneurs must – just like the leasing rate itself – account for expenses for the upkeep of the vehicle relating to maintenance and wear and tear accordingly and take them into account when preparing the business tax return, unless the leasing contract provides for such assumption of the services. Running costs, such as fuel or oil, are still not subject to the trade tax addition. In the event of future non-consideration, there are significant consequences at the latest in the event of repetition.

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