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What if income from benefits is negative?

Negative income or losses from benefits can be offset against profits from similar income in the same year. At the same time, it must be clear that you could also achieve a surplus with the other benefits. Otherwise, the losses from the services will not be recognised, but you do not have to pay tax on the income either.

If the income from benefits is negative, it can be carried back to the previous year and offset against the similar profits made there. You can also carry the losses forward to the following year and offset them against the surpluses you are likely to achieve then.

By carrying back or forward losses, you reduce your taxable income in the relevant year.

Note: Previously, you had a double option with the loss carryback: you could waive it entirely and save the loss for the following year. Or you could carry back the loss with a specific amount. "At the request of the taxpayer, the loss carryback is to be waived in whole or in part. The amount of the loss carryback must be specified in the application" (§ 10d para. 1 sentences 5 and 6 EStG).

Since 2022, this option has been restricted: you can only waive the application of the loss carryback in favour of the loss carryforward entirely, but you can no longer carry back a partial amount. "At the request of the taxpayer, the application of the loss carryback is to be waived in full" (§ 10d para. 1 sentence 6 EStG-new). This means: Under the previous legal situation, the amount of the loss carryback could be limited on request so that losses were not used up by the basic allowance. This option is now no longer available for the loss carryback over two years.

What if income from benefits is negative?

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What are other benefits?

If income cannot be attributed to any other type of income, it may fall under "income from other benefits". The law provides examples of other benefits, such as occasional brokerage and the rental of movable items (§ 22 No. 3 EStG).

Examples of income from other benefits:

• Commissions for referring course participants.
• Commission for taking out insurance for yourself or relatives.
• Commissions for occasional brokerage, e.g. of a flat, a contract, a membership, a loan.
• Fees for chartering your own motorboat.
• Fees for renting out a motorhome to different tenants.
• Fees for occasional performances as an amateur musician.
• Payments to DLRG lifeguards.
• Fees for participating in scientific tests.
• Fees for renting containers.
• Fees for lending private items, e.g. concrete mixer, other tools.
• Fees for caring for a non-relative.
• Payment for a favour, e.g. helping with a move.
• Carpool payments from colleagues for giving them a lift to work.
• Bribes or kickbacks.
• Commissions for recruiting participants in pyramid schemes.

Income from "other services" is tax-free if it is less than 256 Euro per year. This is not an allowance, but a tax exemption limit. This means: A total profit of 255 Euro is tax-free, but a profit of 256 Euro or more is fully taxable.

Note: If an employee receives money from their employer for attaching a number plate with the employer's logo to their private car, this is considered taxable income. The employer's view that this payment is not income but tax-free other income up to 255.99 Euro per year was rejected by the Federal Fiscal Court (BFH decision of 21.6.2022, VI R 20/20).

 

What are other benefits?