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No tax reduction for craftsman services if the shareholder settlement account is debited

13 October 2022

Roland Speidel, Certified Tax Advisor, Lawyer, Senior Manager, Department Tax & Legal |

The prerequisite for claiming the tax reduction for craftsman services is that the taxpayer has received an invoice for these services and that the payment has been made to a bank account of the service provider. In its decision of June 9, 2022 (Case No. VI R 23/20), the German Federal Fiscal Court (Bundesfinanzhof, BFH) commented on the legal question of whether the tax reduction is also to be granted if the invoice amount is debited to the shareholder settlement account of the taxpayer at the GmbH providing the service by way of a set-off.

In the case in question, a GmbH (limited liability company) operating a roofing business carried out waterproofing and repair work on the residential building of one of its shareholders. He settled the invoice issued to him for this work by offsetting it against his shareholder settlement account. The tax office refused to grant the requested tax reduction for craftsman services because the formal requirements were not met. The BFH shared this view.

This requires the payment transaction to be made via a credit institution, i.e. it must be documented by a bank. Otherwise, according to the unanimous legal opinion, the formal requirements are not met, even if the expenses claimed - as in the case in question - are generally eligible for tax relief. This also applies following the revision of the provision by the Annual Tax Act 2008, according to which only the requirement for receipts in the tax assessment procedure, which had applied until then, has been dropped.

Accordingly, the invoice amount must be credited to a bank account of the service provider. In the present case, however, the debit in question was made by way of set-off by debiting the shareholder’s clearing account. However, the credit in question was made by debiting the shareholder’s clearing account, which is a separate account held by the shareholder with the GmbH holding the account, but not a bank account of the GmbH. This payment method therefore does not satisfy the statutory requirements.


The BFH follows the opinion of the Federal Ministry of Finance (Bundesministerium der Finanzen, BMF), which requires bank transfers or direct debits payable to the bank account of the service provider in order to recognise the tax reduction for craftsmen’s services. For practical purposes, it is therefore advisable to adhere to the formal requirements for the requested tax reduction - issuance of an invoice and payment to a bank account of the service provider - in order to avoid the risk of these expenses subsequently not being recognised.