Germany: Expenses for rental of moveable and immoveable assets may be subject to trade tax (Federal Tax Court decision)

A Federal Tax Court decision concerning expenses for rental of moveable and immoveable assets

Expenses for rental of moveable and immoveable assets may be subject to trade tax

The German Federal Tax Court (BFH) held (III R 22/20) that expenses incurred by an event manager for the rental of movable assets (equipment) and immovable assets (in particular locations) for its customers may be subject to trade tax to the extent the event manager held those assets for a longer period of time, or repeatedly held similar assets for a short period of time, in order to be able to repeatedly organize new events with such assets.


Corporations that maintain a permanent establishment (PE) in Germany are subject not only to corporate income tax but also to trade tax, which is calculated based on trade income. Trade income is the profit from business operations determined in accordance with the German Corporate Income Tax Act (KStG), increased or reduced by additions or reductions in accordance with the German Trade Tax Act (GewStG). For example, rental expenses for the use of movable and immovable fixed assets owned by another party are to be added to the trade income.

Read a June 2023 report [PDF 993 KB] prepared by the KPMG member firm in Germany


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