Has passed change in 1225 to s 744

BFH judgment v. - IX R 69/04 BStBl 2007 II p. 579



The plaintiffs and appellants (plaintiffs) - spouses assessed for income tax together - submitted the income tax return for 1997 (year of dispute) to the defendant and defendant (tax office - FA -) in March 1999. This initially assessed the application by decision of April 1999, but changed the final decision based on the following facts.

The plaintiff is the owner of a piece of land built with a rental apartment building. With a notarial contract dated April 1977 (with the participation of a supplementary guardian and approved by the guardianship court), he granted his sons S and N, who were still underage at the age of 11 and 14, a contractual, limited usufructuary right to this property. Its entry in the land register was deleted in March 2000. After the usufructuary rights expired at the end of 1981 (S) and the end of 1984 (N), son N continued to declare the income from this property in his tax return. The statements of the plaintiff and the son were usually drawn up by the current legal representative at the same time and submitted to the FA.

Notwithstanding this, from 1985 and in the following years, the FA allocated the income from the rental property to the plaintiffs in accordance with Annex V submitted by the son, without the plaintiffs declaring such income; but they accepted their imputation up to the year of the dispute.

In 1997, the year of the dispute, Annex V of the now limited taxable son N was submitted later, contrary to the previous practice, with the result that the income from the rental property was not recorded in the decision of April 1999. After the son's Annex V was forwarded, the FA corrected the final decision in accordance with Section 172, Paragraph 1, Clause 1, No. 2 of the Tax Code (AO) with an amendment notice of August 1999.

After an unsuccessful objection, the Finanzgericht (FG) dismissed the action against the decision, which had since been changed for other reasons and made the subject of the proceedings, also with regard to the alleged tax exemption for the plaintiff's employee contributions to social security as unfounded (judgment in decisions of the Finanzgerichte 2004, 1739 ): The FA was allowed to change the final decision in 1997 in accordance with Section 172, Paragraph 1, Clause 1, No. 2, Letter c AO; because the plaintiff submitted an objectively incorrect tax return because he, as the owner, did not declare rental income attributable to him. The usufructuary right established in favor of his sons on this property had expired after the expiry of the time limit. The applicant also received the employee contributions to social security as wages with payment by her employer.

With the appeal, the plaintiffs complain of the violation of substantive law (Section 172 (1) sentence 1 no. 2 letter c, Section 163 AO, Section 3 no 1, § 21 Paragraph 1 of the Income Tax Act —EStG—, Art. 3 Paragraph 1 of the Basic Law —GG—). Section 172 (1) sentence 1 no. 2 letter c AO was not fulfilled; because the plaintiff did not submit an incorrect tax return. The rental income is undisputedly attributable to the son as a result of the extension of the usufruct agreement; accordingly there is no need to be referred back to the FG. The employee's share of the total social insurance had already not been paid and the plaintiff had not been paid by the employer either. From a constitutional point of view (objective net principle, taxation based on performance) it does not make sense to treat the employee's share differently from the employer's share under tax law. In addition, the employee only has a remuneration claim against his employer that is reduced by the employee's share; the employee therefore does not have any disposable pecuniary advantage and consequently should not be taxed.

The plaintiffs request

the FG judgment, the 1997 income tax assessment dated, the objection decision dated and the 1997 income tax amendment notice dated,

Alternatively, the 1997 income tax

a) for the plaintiff without taking into account the rental and leasing income for the property in S and

b) to be determined in the case of the plaintiff without including the employee's contribution to social security in the assessment basis for income from employment.

The FA requests

to reject the appeal.


The revision is well founded; it leads to the annulment of the preliminary ruling and the referral of the matter back to the FG for other negotiation and decision (Section 126, Paragraph 3, Clause 1, No. 2 of the Financial Court Regulations —FGO—).

The FG wrongly decided that the FA was allowed to amend the final income tax assessment according to Section 172, Paragraph 1, Clause 1, No. 2, Letter c AO (see 1.). On the other hand, the FG correctly treated the employee contributions to social security as an accrued wage (see 2.).

1. Pursuant to Section 172 (1) sentence 1 no. 2 letter c AO, a tax assessment may only be revoked or changed, unless it has been issued provisionally or subject to review, if it involves taxes other than import and export duties within the meaning of the German Tax Code. of Art. 4 No. 10, 11 of the Customs Code or excise duties, insofar as it was obtained through unfair means such as fraudulent deception, threats or bribery. This is not the case if the rental income not declared by the plaintiff is not attributable to him but to his son N.

The FG wrongly failed to examine this. This is because it did not check who met the criteria for rental and leasing as an income type.

a) The objective fact of the rental and leasing type of income is realized by those who have the legal or actual power to let others use or use one of the assets named in Section 21 (1) EStG for a fee; he must bear the rights and obligations from a rental or lease agreement or a similar agreement on the transfer of use (cf., BFH / NV 2003, 1043, with further references). It depends on who exercises the decisive economic disposition powers over the rental property and thus a rental activity himself or through a legal representative or administrator (cf., BFH / NV 2004, 1079, with further references). A right of use under the law of obligations can also lead to the attribution of income from renting and leasing in accordance with Section 21 (1) EStG (cf., BFH / NV 1996, 122, and IX R 52/83, BFHE 146, 415, BStBl II 1986, 605, with further references; sa, BFHE 177, 412, BStBl II 1997, 121).

If parents order a usufruct (right of use) to a property for their underage children, it is also necessary that this takes place on the basis of a contract that is effective under civil law and that the parties actually implement the agreements made between them (e.g., BFH / NV 1991, 744; from IX R 216/84, BFHE 159, 319, BStBl II 1992, 506; in BFH / NV 1996, 122). This can also take the form of a - legally permissible (cf. Staudinger / Promberger, 12th ed., Preliminary to §§ 1030 ff. Margin no. 16) - usufruct under the law of obligations (right of use), for example because the usufruct is not entered in the land register (cf. BFH judgments in BFHE 146, 415, BStBl II 1986, 605; from IX R 89/82, BFHE 143, 310, BStBl II 1985, 390, and in BFH / NV 1996, 122) or - as here - from the outset was justified by law of obligations. It is true that the limitation of the (real) usufruct leads to its expiry under civil law, that of the (contractual) right of use leads to the termination of the legal effects of this legal transaction; With the occurrence of the condition (time lapse), the previous legal status is fundamentally restored (Section 158, Paragraph 2, Section 163 of the Civil Code —BGB—, cf. Palandt / Bassenge, Bürgerliches Gesetzbuch, 66th edition, introduction to Section 1030 margin no 6; Palandt / Heinrichs, loc. Cit., Section 158 Rz 2; Erman / Michalski, BGB, 11th edition, before Section 1030 Rz 15; Erman / Armbrüster, loc. Cit., Section 158 Rz 1). However, this does not apply if the continuation of the (contractual) right of use is also extended for the period after the (conditional) period has expired on the basis of an express or implied agreement.

b) The Senate cannot judge to whom the income is to be allocated according to these principles without the relevant findings of the FG. The matter is therefore not ready for a decision; it is returned to the FG. This will make up for the determinations necessary for the realization of the fact of the rental and leasing income and their attribution in accordance with the above statements (under 1. a).

2. On the other hand, the FG correctly viewed the employee shares in unemployment, health and pension insurance (total social insurance) as consideration for the provision of work and thus as wages (constant case law: see BFH resolutions of XI B 170/03, BFH / NV 2005, 539; from VI B 120/03, BFH / NV 2004, 1263; and unanimous literature: e.g. Breinersdorfer, in: Kirchhof / Söhn / Mellinghoff, EStG, § 19 Rz B 304; Barein in Littmann / Bitz / Pust, Income tax law, § 19 EStG margin no.192). As the sole debtor, the employer has to pay the total social security contribution to the collection point and withhold it by deducting wages from the employee (§ 28e, § 28g of the Social Code —SGB— IV; cf. Küttner / Griese / Schlegel, Personnel Handbook 2006, keyword: “Social insurance contributions” margin no 2, 39, 53; Schaub / Linck, ArbR-Hdb., 11th edition, § 71 Rz 12, 28; MünchArbR / Peters-Lange, Vol. 1, 2nd edition, § 64 Rz 74, 75); however, the employee has to pay half of the total social security contributions (employee's share) from the gross remuneration due to him (§ 346 SBG III, § 249 SGB V, § 168 SGB VI, § 58 SGB XI; decision of the Federal Labor Court —BAG— from GS 1/00, Neue Juristische Wochenschrift —NJW— 2001, 3570, under III. 1. d); the technical processing chosen for social security reasons to protect the insured employee does not change this (see MünchKommBGB / Müller-Glöge, vol. 4, 4th edition, § 611 margin no. 1147). According to this, the employee's share of social security withheld is a financial advantage given to the employee (BAG decision in NJW 2001, 3570, loc. Therefore, the employee contributions - if the employee has a legal claim against the pension scheme (cf., BFHE 115, 569, BStBl II 1975, 642, under 4 .; from VI R 109/74, BFHE 123, 37, BStBl II 1977, 761, before I .; in each case with further information) - currently accrued as wages with their payment by the employer (cf., BFHE 172, 46, BStBl II 1994, 246, under II. 1. b); BFH decisions in BFH / NV 2004, 1263, and 2005, 539). Accordingly, the advance deduction in accordance with Section 10 (3) in conjunction with Section 3 No. 62 EStG must also be reduced (cf., BFHE 200, 548, BStBl II 2003, 288; BFH decision in BFH / NV 2006, 49, under 2., mwN).

According to these standards, the objections of the auditor do not take hold: The employee's share is a pecuniary benefit caused by the individual employment relationship. Contrary to the plaintiffs' view, the contractual remuneration claim is basically based on the gross wage including the employee's share of the total social insurance (cf. BAG resolution in NJW 2001, 3570, under III. 1. b, d), unless - as here - no net wage agreement has been made or other collective agreements were decisive (see Palandt / Weidenkaff, loc. cit., § 611 margin no. 51; Staudinger / Richardi, 2005, § 611 margin no. 847). Accordingly, the contrary statements of the revision in the case of a seizure and offsetting are ineffective.

With regard to the constant case law of the BFH, even taking into account the subsequently submitted pleadings by the plaintiffs from, there is no reason to reopen the oral hearing (cf., BFHE 203, 523, BStBl II 2004, 89, under II. 1. a, aa; , BFH / NV 2006, 98).

3. Insofar as the plaintiffs (should) request a different tax assessment for reasons of equity, no decision is required in the present tax assessment procedure, especially since they have expressly or implicitly made such a request according to § 163 AO neither in the assessment, in the objection nor in the lawsuit.

4. A suspension of the proceedings and submission to the Federal Constitutional Court in accordance with Article 100, Paragraph 1 of the Basic Law in conjunction with Section 80 of the Federal Constitutional Court Act is out of the question given the fact that the matter is not ready for judgment (see under 1. b).

Reference (s):
BStBl 2007 II page 579
BB 2007 p. 1098 No. 20
BBK short message No. 11/2007 p. 573
BFH / NV 2007 p. 1225 No. 6
BStBl II 2007 p. 579 No. 12
DB 2007 p. 1059 No. 19
DStRE 2007 p. 948 No. 15
DStZ 2007 p. 333 No. 11
EStB 2007 p. 203 No. 6
HFR 2007 p. 666 No. 7
KÖSDI 2007 p. 15573 No. 6
NWB express message No. 19/2007 p. 1595
NWB express message No. 19/2007 p. 1595
SJ 2007 p. 6 No. 13
StB 2007 p. 201 No. 6
StBW 2007 p. 3 No. 10
StBW 2007 p. 3 No. 10
StuB balance report No. 10/2007 p. 399
WPg 2007 p. 587 No. 13