Principle of relevance

The principle of relevance to the trade balance for the Tax balance states that the tax balance is to be derived from the trade balance. This results from Section 5 (1) EStG, according to which tradespeople who are required to account for the balance sheet must determine their profit for tax purposes in accordance with the principles of proper accounting under commercial law:

• In principle, the tax balance is dependent on the trade balance.

• In accordance with the principle of relevance, the tax balance sheet must show all business assets for which there is an obligation to capitalize or passivate them under commercial law.

The relevance of the commercial balance sheet is limited by the fact that, according to the case law of the BFH, commercial law approach options do not apply to the tax balance sheet, but lead to activation requirements or passivation prohibitions there. As far as the Determination of profits contradicts the tax regulations in the trade balance sheet, the approaches in the trade balance sheet must be corrected for the purposes of taxation.

In practice, however, there is also the relevance of the tax balance for the trade balance, ie the above principle of relevance is reversed. In particular, sole traders and partnerships do not create independent commercial balance sheets, but balance sheets that are recognized by the tax authorities as permissible for tax purposes. The relevance of the tax balance sheet has been in force since 1990 for all tax breaks including tax-free reserves.

Since in principle no higher values may appear in the commercial balance sheet than in the tax balance sheet, it applies to the use of tax benefits that the respective values also appear in the commercial balance sheet.

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