German tax law distinguishes between profit and surplus income at income tax level. Both have in common that the difference between revenue and expenditure is subject to taxation. The difference is – depending on the type of income – referred to as “profit” or “surplus”, whereby the respective amounts can also be negative. In these cases, there is a loss.
As income, however, not only cash payments, but also monetary benefits are to be recorded. A monetary advantage is a service that has an economic value for the recipient without immediate payment. Monetary advantages exist, for example, in grants in kind and company cars, which the entrepreneur also uses privately.
First principle: Taxation of profits and surpluses
Whether a profit or the surplus of income via the advertising costs is to be determined for the respective type of income determines § 2 (1) EStG. The provision classifies the individual types of income according to the following scheme:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.