German Federal Fiscal Court clarifies trade tax on employee housing

The German Federal Fiscal Court (BFH) has clarified the rules regarding the addition of rental expenses to trade tax calculations. The court ruled that the decision depends on actual business circumstances rather than formal criteria like rental duration.

Specifically, expenses for short-term employee accommodations, hotel rooms, or event spaces may be subject to trade tax addition if the rental meets the criteria of ‘fictitious fixed assets.’ This applies if the accommodations are intended to serve the business operations on a permanent basis according to specific operational needs, such as repeated use in the same area or interchangeable properties, even if they are not strictly required for service delivery.