The term “private asset management” plays the decisive role in income tax law in many places. This is because it determines, among other things, whether there is a division of operations or whether there is a lack of factual or personnel links. Many tax exemptions, such as the speculative period according to § 23 EStG, are also linked to asset management. Whether “still” private asset management or “already” a commercial/freelance activity exists, is primarily to be assessed according to the concrete actions of the entrepreneur.
1st Private Asset Management: In principle, this income includes:
The legislature has not conclusively defined the concept of (private) asset management in either procedural or substantive law. This is due to the various, sometimes overlapping, preconditions of individual legislation. In the case of capital assets, for example, although the event of the sale of shares (§ 20(2) no. 1 EStG) may exist, at the same time the investor participates in general commercial transactions. Thus, he (also) fulfils the requirements of a commercial activity according to § 15 (1) sentence 1 no. 1 EStG.
In order to provide clarity at least in basic cases, § 14 sentence 3 AO standardized a “basic case” of (private) asset management. This is therefore the case in cases of ‘fruit drawing’, i.e. the passive use of existing assets. “Classic” cases of private asset management are, for example, the rental of assets (§§ 21 and 22 no. 3 EStG) and the investment in capital assets such as shares and funds (§ 20 EStG).
However, these examples mentioned in § 14 AO are only the rule. Because the respective regulations, here § 20 paragraph 8 and § 21 paragraph 3 EStG, also standardize the exception of so-called subsidiarity. Thus, for example, capital income is attributable to commercial income insofar as it belongs to it. If, in principle, a capital-management activity constitutes a business, § 15 EStG takes precedence over § 20 EStG. A corresponding requalification of the income then takes place.
2.“Classic” of asset management: Capital assets and letting
The term private asset management classically includes investments, especially those in capital values and rental properties. These incomes are recorded by §§ 20 and 21 EStG.
2.1. Private asset management – Income from capital assets
German income tax law finally defines what income is from capital assets in § 20 EStG. This type of income covers, inter alia:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.