Spirited assets – What is it?
Undertakings which are required to prepare a balance sheet and annual financial statements must always report the operating assets in this context. Basically, the business assets are those goods that are attributable to a company such as a GmbH and are directly related to the business. Within the framework of the balance sheet, entrepreneurs are required to check with each asset whether it represents a business assets and what their value is.
Especially with self-employed entrepreneurs, it often happens that business assets and private assets merge. If, in the context of a balance sheet, the assets are valued and individual goods can not be clearly attributed to the necessary business assets or to the necessary private assets , then there is an option with regard to their accounting assessment. Are these not clearly attributable to goods in an objective connection to the respective operation, so there is an option that allows to evaluate this as gewillkürtes operating assets and disclosed in accordance with the balance sheet.
It is possible to create willing business assets through a comparison of the stocks , as well as through the determination of profits through income – surplus – account ( EÜR ). Entrepreneurs have much more extensive options to show assets than willing business assets, as a freelancer. In the case of freelancers , the scope of the business assets is limited by their activity. Assets may only be acquired if it clearly requires the exercise of their profession. For example, a doctor could identify a property with practice, but not an apartment building as a business asset.
Moreover, in business practice, it often happens that various goods are used both operationally and privately. If the degree of their operational use is between 10 and 50%, they can be treated as willing assets on request. A classic example of willing business assets is a car that is used as a company car both operationally and privately.
Which examples of willing business assets are common in practice?
Theoretically, any asset that can not be clearly assigned would qualify for arbitrariness. Nevertheless, in the practice of entrepreneurs and self-employed people are accumulating various business transactions, which are worth mentioning as an interesting example. These include, for example, the following facts:
|An entrepreneur owns another property in addition to his actual business property, but this is not yet needed for expansion.||The property can be accounted for as a tangible business asset, as operational use is likely to occur and private use in its turn appears equally unlikely.|
|In a self-occupied single-family home, an entrepreneur maintains an office, which, however, accounts for less than 10% of the total living space in terms of area.||The office belongs to the private assets, since the remaining area is used almost exclusively private.|
|A company car is used 35% privately.||On the basis of the degree of utilization , the company car can be assigned to business assets.|
Which assets can be treated as a willing asset?
EStR 4.2 (1) on § 4 EStG states that
“Assets which are in a certain objective relationship with the enterprise and which are intended to promote it and are capable of (…) being treated as a willing business asset.”
An operational use of at least 10% and a maximum of 50% must be present in order to be able to treat goods as a willing business asset.
In the case of such assets, the owner is granted a right to choose whether to acquire or change the use of the asset, with which he can decide whether the asset is booked on business or comes into private wealth.
In accordance with § 8 EStDV , this option is also available in a modified form for mixed-use buildings:
“Self-used parts of land do not need to be treated as business assets if their value is not more than one-fifth of the mean value of the entire property and not more than € 20,500.”
What has to be considered in the case of private use of corporate assets?
If a self-employed person or a freelancer uses a property at least partly privately or allows his employees to use it, this usually also results in a pecuniary advantage . This can be marginal, for example, for the one-time loan of a tool, on the other hand, but also for tax purposes. This is the case for private and professional company cars , for example. In individual cases, it must therefore be checked whether private use results in a pecuniary benefit. If this can be answered in the affirmative, this must be taken into account in income tax .
Running an asset as a business asset has these consequences:
- The costs of the asset are fully deductible and depreciable.
- If necessary. the input tax can be deducted.
- If the asset is sold or otherwise removed from the assets, taxes are due.
When business assets, when private assets and when willing assets?
Whether an asset belongs to the operating or private assets depends on the degree of its operational use. In accordance with the income tax guidelines, the following degrees of utilization, each with different legal consequences, can be identified:
|Degree of operational use in%||meaning|
Usage below 10%
|If the operational use is less than 10%, the property is clearly assigned to the private assets. There is no voting right for the assignment.|
Usage between 10% and 50%
|If the operational use is between 10% and 50%, then there is an option. An independent entrepreneur can therefore decide for himself whether he would like to attribute a good to the business assets or his private assets. If he writes it to the business assets, it is a matter of willed business assets.|
Usage over 50%
|If the degree of operational use is more than 50%, then there is also no right to vote. Due to the high degree of utilization, it is automatically assumed that it is a necessary business asset, which is to be valued accordingly in terms of tax and accounting.|
The degree of utilization of such shared goods should be documented in a suitable manner. For example, a logbook for business and privately used company cars to meet this requirement. In the case of company cars and company cars, there is also the principle that the monetary advantage resulting from their use can no longer be compensated by means of a 1% rule . This is due to the fact that the logbook provides a complete documentation, on the basis of which the use can be accurately traced.
Incidentally, leasing vehicles are not part of the business assets as users and procurers are not the owners. However, the costs incurred for the lease may also be taken into account as an operating expense, depending on the degree of use.
What about the input tax and the input tax deduction for goods of the willed business assets?
When acquiring necessary and operating business assets, sales tax usually also applies. These can be claimed by companies in the context of the advance VAT return by means of input tax deduction . The value added tax stated in invoice amounts for maintenance, servicing and similar items can also be taken into account in the same way.
What problems can a reclassification of corporate assets to private assets entail?
If, for example, the degree of use of a car falls below the limit of 10%, this is private wealth . As a result, a reclassification is required. However, it is possible that hidden reserves have formed during the useful life. This occurs, for example, when the depreciation is greater than the actual loss in value or a good has become more valuable. The latter is possible, for example, in real estate, buildings or even a rented to employees house, which has simply gained in value over the years.
If a good no longer belongs to a willing-earning business asset and the market value is higher than the recognized net book value , this must be taxed by the entrepreneur from the business assets.
For operationally only slightly used cars, the mileage allowance can be worthwhile instead of a company car.
When is the allocation to private assets, when the better to operating assets?
This question can not be answered flat rate . For example, in the case of mixed use of a car, the assignment to private assets may be worthwhile, as the operational use of the mileage allowance can be claimed with a logbook and private use does not have to be billed via the 1% rule.
It should also be noted that if any of the assets are sold or otherwise removed from the assets, income tax in the amount of the full current (possibly amortized) value of the item is due.
Sales from private assets are resp. § 23 EStG tax-free.