Germany Fiscal Court Clarifies Profit Limitation in Claiming Investment Deductions

The German Federal Fiscal Court March 19 posted online Decision No. X R 16, 17/23, clarifying the profit limitation in claiming investment deductions. The taxpayers, a jointly assessed married couple, operated a landscaping business and claimed an investment deduction (IAB) based on a calculated profit of 203,381 euros (US$235,222). The Tax Office denied the claim, contending that the profit exceeded the 200,000-euro (US$231,312) threshold after including off-balance-sheet adjustments and trade tax. The taxpayers argued that the relevant profit referred only to the tax-balance-sheet profit, and that including trade tax contradicted the purpose of supporting small and medium enterprises (SMEs). On ...