Dear colleagues,

Last week we already had in the Facebook group “Flies and Steer” written that we will comment on the new verdict and its effects. The Federal Fiscal Court (BFH) in Munich, the highest tax court in Germany, has now published a number of decisions on travel expense law, which also affect on-board employees.

But first, one by one:

With the Annual Tax Act 2014, the Income Tax Act (EStG) introduced the concept of first place of activity introduced. This was necessary in particular as a result of the rather generous and positive for taxpayers interpretation of the Act by the Federal Fiscal Court on the subject of travel expenses from the point of view of the legislator. The legislative text, which has now been discussed, is therefore as follows from the assessment period 2014:

The first place of activity is the fixed operational establishment of the employer, an affiliated company (Section 15 of the Stock Corporation Act) or a third party appointed by the employer to which the employee is permanently assigned. 2The assignment within the meaning of sentence 1 is determined by the service or employment law provisions and the agreements and instructions completing these. 3Permanent assignment is to be assumed in particular if the employee is permanently assigned, for the duration of the employment relationship or over a period of 48 months In addition, to work at such a place of activity. 4If there is no such service or employment law provision on a place of activity or is it ambiguous, the first place of activity is the company institution at which the employee permanently

1. is typically intended to work on a working day basis, or

2. two full working days per working week or at least one third of its agreed
should work regularly.

The process in recent years

In the past, we had (the tax office TaxCollector) has written reasons and objections for many colleagues, because some of the on-board employees have no real stationing at all, the airport itself may not be a “fixed facility” or is simply not visited often enough.

However, this legislative amendment mentioned above did not only affect flight personnel, but also a number of other professions, such as truck drivers, railway conductors or, in some cases, commercial agents. You can certainly argue about the assessment made by the Federal Fiscal Court just before and the tax losses that this entailed from the point of view of the Ministry of Finance. However, as a result of the laws applicable to the tax return 2014 et seq., the above law and thus the”first place of activity“decisively. The Federal Ministry of Finance issued a letter about the “first place of activity” and later added to it. Click here to write about the “first place of activity”

Based on the letter, it was sufficiently clear to the vast majority of tax offices that a double travel allowance was out of the question. Up to and including 2013, you could make it credible as part of the tax return and the Federal Fiscal Court decision that you are carrying out a so-called change of assignment activity as a pilot or flight attendant. As a result, the kilometers traveled could be completely deducted, and the tax calculation of additional catering expenses (“expenses”) could be settled according to the doorstep principle. Since some colleagues rightly did not want to adopt the tax office's unilateral view, they first brought legal action before the respective tax court. In the two cases to be mentioned later, colleagues were defeated. Since there was still no reliable case law from the Federal Fiscal Court on the amended legal situation, the revision was also allowed. In April, there was initially an oral hearing before the Federal Fiscal Court in Munich; on 18.07.2019, the Federal Fiscal Court now took place in a series of judgments (VI R 27/17 dated 04.04.2019, VI R 6/17 from 10.04.2019, VI R 36/16, VI R 40/16 and VI R 12/17 from 11.04.2019) position on the new travel expense legislation. The two processes that are decisive for on-board employees are VI R 40/16 as well as VI R 17/17.

In the first-mentioned procedure VI R 40/16, the following guidelines were published:

1. Stationary operational facilities are spatially grouped material which serve the activities of the employer, an affiliated company or a third party determined by the employer and are connected to the ground or intended to be used primarily on a location-specific basis.

2. A (large-scale) first place of activity also exists if a large number of such means, which in themselves may represent independent operational facilities, are spatially delimited in an organizational, technical or economic connection with the operational activity of the employer, an affiliated company or a third party determined by the employer. Accordingly, a large and correspondingly infrastructurally developed area (e.g. plant, company site, train station or airport) can also be considered as such a first place of activity.

3. An aircraft pilot who is permanently assigned to an airport by her employer under employment law and performs at least a small number of activities on the airport grounds which she owes under an employment contract as an aircraft pilot, has her first place of activity there.

4. The assignment to a fixed company institution is determined by the service or employment law provisions and filling out these agreements. There is no need for a separate allocation for income tax purposes.

The Federal Fiscal Court has now stated that the vast majority of colleagues are likely to be assigned permanently. Even a recent transfer to the corresponding airport does not help to shake this prima facie evidence. Since the airline has several buildings within and outside the airport, the regular briefing takes place there and with reference to the above-mentioned BMF letter, the Federal Fiscal Court came to the conclusion that this sufficiently clarified that a first place of activity exists.

In this case, the competent tax court had already provided extensive evidence (at first instance) that the plaintiff co-pilot only spent a small amount of work at the airport facility, but “The fact that the plaintiff has thus carried out her actual professional activity as a co-pilot to a sufficient extent also in a fixed company facility owned by her employer at Airport X is not objectionable under audit law. In particular, participation in the mandatory briefing before each flight is one of the plaintiff's employment contract obligations and is part of the profession of pilot carried out by her. The fact that the plaintiff primarily carries out her activity on an aircraft, which is in turn not a first place of activity due to lack of physical stability no longer precludes this — as stated above — following the reorganization of tax travel expense legislation. ”

In the second method VI R 17/17, it now looks as follows:

Substantially the same content as the Federal Fiscal Court ruling of 11.04.2019 VI R 40/16 — First place of activity of flying personnel under new travel expenses lawIn this case, the Federal Fiscal Court “was unable to assess whether the plaintiffs also acted there to the extent necessary to classify these operational facilities as the first place of activity within the meaning of Section 9 (4) of the Income Tax Act as amended in the year in dispute (EStG). ”

Unfortunately, things now look even worse as far as the future of “double route billing” is concerned. In the event that one has so far referred to the judgment VI R 40/16 in opposition proceedings, one should try, as far as this is still possible with the responsible clerk, to the Procedure VI R 17/17 to switch. Otherwise, we have been referring exclusively to the V for quite some timeexperience VI R 17/17, which has now been referred back to the competent tax court.

What will the decision be there? When is this?

We are in the crystal ball and believe that it will definitely be at least a good year before this process continues. If necessary, this could even be two years. However, as a result of the explanations in the first case (VI R 40/16), the signs for another decision are not really favourable. However, should the plaintiffs manage to present a different presentation of their operational activities here, then one should definitely participate and continue to appeal with reference to the pending decision in Procedure VI R 17/17.

In short! If you do not recognize the “double route statement” in the future, file an appeal and refer to the Procedure VI R 17/17. If you have any questions about this, feel free to contact us or at TaxCollector Team.

We hope that we were able to shed some light on this and right now we don't have to give up hope and can continue as before.

Your CrewLife team

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