The Federal Fiscal Court (Bundesfinanzhof, BFH) has ruled that the property tax owed by the landlord but contractually apportioned to the commercial tenant is part of the rent. Therefore, according to the BFH, it is to be added to the profit for trade tax purposes. In the case at hand, the plaintiff, a GmbH (limited liability company), had rented a business building from its shareholders. In the lease agreement, it was agreed that the plaintiff, as the tenant, would bear the property tax.
The tax office was of the opinion that the property tax contractually apportioned to the plaintiff belonged to the rent payable by it and therefore had to be added for trade tax purposes. The tax court took a different view and upheld the claim. The BFH allowed the appeal and overturned the ruling of the Fiscal Court. According to the BFH, the term "rent" used by the law is to be understood in economic terms. This also included expenses borne by the tenant which, according to the burden-sharing system typical of the law, would actually have to be borne by the landlord, but which were contractually assumed by the tenant.
According to the BFH, such a case existed here. The debtor of the property tax is therefore the owner, i.e. the landlord. Under civil law, however, the property tax can be passed on to the tenant. It is thus included in the rent, which is to be added in part under trade tax law. The addition cannot therefore be reduced by the tenant assuming expenses that would actually have to be borne by the landlord and the landlord accepting a correspondingly reduced rent in return.
Source: Number 017/22 - Judgment of 02.02.2022; III R 65/19/bundesfinanzhof.de.
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