On 24 September 2026, the Federal Fiscal Court (BFH) authorised the publication of five new rulings. The rulings concern, amongst other things, the tax treatment of maintaining two households by self-employed persons, the definition of a permanent establishment under travel expense law, and company law issues relating to mergers. Here is an overview of the key points.
Maintaining two sets of accounts for the self-employed
Self-employed individuals may only claim the costs of maintaining two households for tax purposes if they have their own household outside the place where they predominantly carry out their work and, at the same time, live at the place where the main focus of their work lies. Anyone whose sole place of business is in a specific location automatically has their main centre of professional activity there. This clarification is important for all self-employed people who have multiple places of residence or work in different locations. (Judgement of 19 May 2026, Ref. VIII R 15/24)
Permanent establishment under travel expenses legislation: Seelotse loses its case
The Federal Fiscal Court (BFH) has revised its previous case law and ruled that, for the purposes of travel expense legislation, a permanent establishment for tax purposes still requires a fixed, permanent facility which is visited regularly and not merely occasionally. Specifically: a maritime pilot’s area of operation does not constitute what is known as a ‘wide-area permanent establishment’. This has a direct impact on the extent to which travel expenses are deductible as business expenses. (Judgement of 23 June 2026, Ref. VIII R 13/24)
Market development grant for a foreign company
If a company pays a so-called market development grant to a foreign, possibly related, company, this payment may, under certain conditions, be recognised for tax purposes as a business expense. The prerequisite is that the grant satisfies the so-called arm’s length principle – that is, it was agreed in the same way as independent third parties would have done – and that it is intended to generate higher licence revenues. In this case, it does not constitute a taxable withdrawal. (Judgment of 20 May 2026, Ref. IV R 37/23)
Acting as an agent or trading on one’s own account in the car hire business?
For VAT purposes, a vehicle broker does not provide a rental service of their own unless they have hired the vehicle themselves. This is relevant in practice for platforms or brokers in the vehicle hire sector, as it determines who is regarded as the supplier and is therefore liable for VAT. (Judgment of 21 May 2026, Ref. V R 17/24)
Merger: Goodwill generated by the company itself must also be recognised
In the event of a merger between two entities, the transferring company must recognise all assets in its final tax balance sheet at their so-called fair value, i.e. their market value. This expressly includes self-generated goodwill, which is not normally eligible for capitalisation. However, this value must not be negative. Liabilities must also be included in full, even if they would otherwise be excluded from the balance sheet. By contrast, provisions for expenses alone may not be recognised. (Judgment of 23 April 2026, Ref. X R 34/21)
What this means for clients
The rulings concern self-employed individuals with multiple places of residence, businesses with cross-border structures, and companies that are planning a merger or have already carried one out. In all these areas, the new Federal Fiscal Court (BFH) rulings may mean that previous tax assessments should be reviewed. It is advisable to seek individual advice from a tax adviser or solicitor.
Source: Haufe: Tax
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