SteuerGo FAQs

Should business expenses be stated net or gross?

Like business income, business expenses must also be stated at net value - i.e. excluding VAT. However, the VAT paid is part of the business expenses and must therefore be entered separately under "VAT paid".

Exception: Small businesses that have opted for the small business regulation under section 19 of the VAT Act enter their business expenses with the gross amounts, as they cannot deduct the VAT included as input tax. The same applies to farmers and foresters who apply the flat-rate input tax deduction under section 24 of the VAT Act. Small businesses may then not enter any "VAT paid".

Business expenses are deductible in the year in which you paid them. Regularly recurring business expenses belong to the relevant year even if you pay them within a period of 10 days after or before the tax year, e.g. ongoing insurance premiums, leases, rents, salaries.

The advance VAT payment for December (with extended deadlines: November) or for the fourth quarter, which must be paid by 10 January of the following year, still belongs to the old year and can be deducted as business expenses there. The tax authorities are very strict here: If the advance VAT payment is made after 10 January, it can no longer be recorded as a business expense in the old year for those using the cash method, but must be recorded in the new year. Payment after 10 January is no longer considered a regularly recurring expense. If 10 January is a Saturday or Sunday, the due date for the advance VAT payment is postponed to the next working day, but this extension in the VAT Act has no effect on the 10-day period according to section 11 of the Income Tax Act (BFH ruling of 11.11.2014, VIII R 34/12).

But beware: The regulation is extremely complicated and has numerous special features, for example in the case of direct debit. If necessary, ask your tax office when the advance VAT payment is to be recorded.