Anyo\u00adne who, as a sole trader, car\u00adri\u00ades out seve\u00adral com\u00admer\u00adcial acti\u00advi\u00adties will soo\u00adner or later ask them\u00adsel\u00adves: Are the\u00adse taxed sepa\u00adra\u00adte\u00adly or coll\u00adec\u00adtively? In a recent jud\u00adge\u00adment, the Fede\u00adral Fis\u00adcal Court (BFH) has cla\u00adri\u00adfied the cri\u00adte\u00adria accor\u00adding to which trade tax aut\u00adho\u00adri\u00adties deter\u00admi\u00adne whe\u00adther the\u00adre is one or more busi\u00adness ope\u00adra\u00adti\u00adons, ther\u00adeby over\u00adtur\u00adning the pre\u00advious fis\u00adcal court jud\u00adge\u00adment. The case refe\u00adrence is X R 8\/23; the jud\u00adge\u00adment was han\u00added down on 28 Janu\u00adary 2026 and published on 16 July 2026.<\/p>\n\n\n\n
An entre\u00adpre\u00adneur ran a who\u00adle\u00adsa\u00adle busi\u00adness deal\u00ading in second-hand mate\u00adri\u00adals and was\u00adte mate\u00adri\u00adals. On the same pre\u00admi\u00adses, his mother ran a scrap metal busi\u00adness. Fol\u00adlo\u00adwing her death, he also inhe\u00adri\u00adted this busi\u00adness. He main\u00adtai\u00adned sepa\u00adra\u00adte accounts and sepa\u00adra\u00adte bank accounts, used dif\u00adfe\u00adrent com\u00adpa\u00adny signs and sub\u00admit\u00adted a sepa\u00adra\u00adte trade tax return for each business.<\/p>\n\n\n\n
The tax office took a dif\u00adfe\u00adrent view. It regard\u00aded both acti\u00advi\u00adties as forming part of a sin\u00adgle busi\u00adness and the\u00adr\u00ade\u00adfo\u00adre issued only one joint trade tax assess\u00adment noti\u00adce. The Finan\u00adce Court upheld this assess\u00adment. The Fede\u00adral Fis\u00adcal Court, howe\u00adver, refer\u00adred the case back becau\u00adse the facts of the case were insuf\u00adfi\u00adci\u00adent to reach a final judgement.<\/p>\n\n\n\n
Under Sec\u00adtion 2(1) of the Trade Tax Act, trade tax is levied on the indi\u00advi\u00addu\u00adal busi\u00adness. Whe\u00adther a per\u00adson ope\u00adra\u00adtes one or more busi\u00adnesses depends on two main factors:<\/p>\n\n\n\n
In this regard, the Fede\u00adral Fis\u00adcal Court (BFH) empha\u00adsi\u00ads\u00ades a tie\u00adred approach: the more diver\u00adse the acti\u00advi\u00adties, the stron\u00adger the fac\u00adtu\u00adal con\u00adnec\u00adtion must be in order for the busi\u00adness to still be regard\u00aded as a sin\u00adgle entity.<\/p>\n\n\n\n
An eco\u00adno\u00admic link exists whe\u00adre both acti\u00advi\u00adties sup\u00adport and com\u00adple\u00adment one ano\u00adther. An orga\u00adni\u00adsa\u00adtio\u00adnal link may ari\u00adse from shared pre\u00admi\u00adses, shared staff or joint pro\u00adcu\u00adre\u00adment. Shared accounts, a uni\u00adfied method of deter\u00admi\u00adning pro\u00adfit, or the off\u00adset\u00adting of los\u00adses bet\u00adween the divi\u00adsi\u00adons are indi\u00adca\u00adti\u00adons of a finan\u00adcial link.<\/p>\n\n\n\n
The Fede\u00adral Fis\u00adcal Court (BFH) makes it clear that even a busi\u00adness acqui\u00adred by inhe\u00adri\u00adtance does not auto\u00adma\u00adti\u00adcal\u00adly result in a mer\u00adger. The entrepreneur\u2019s sub\u00adjec\u00adti\u00adve inten\u00adti\u00adon to keep the busi\u00adnesses sepa\u00adra\u00adte is not, on its own, suf\u00adfi\u00adci\u00adent. The decisi\u00adve fac\u00adtor is whe\u00adther the sepa\u00adra\u00adti\u00adon was objec\u00adtively reco\u00adg\u00adnisable and actual\u00adly imple\u00admen\u00adted. At the same time, howe\u00adver, it must not be over\u00adloo\u00adked that two inde\u00adpen\u00addent busi\u00adnesses exis\u00adted pri\u00ador to the mother\u2019s death. If the\u00adre is no dis\u00adcer\u00adni\u00adble chan\u00adge fol\u00adlo\u00adwing the trans\u00adfer, this may indi\u00adca\u00adte that two busi\u00adnesses con\u00adti\u00adnue to exist.<\/p>\n\n\n\n
Anyo\u00adne who runs seve\u00adral busi\u00adnesses and wis\u00adhes to keep them sepa\u00adra\u00adte for tax pur\u00adpo\u00adses should not limit this sepa\u00adra\u00adti\u00adon to mere paper\u00adwork. Kee\u00adping sepa\u00adra\u00adte accounts is an important indi\u00adca\u00adtor, but it is not decisi\u00adve on its own. What mat\u00adters is how things are actual\u00adly orga\u00adnis\u00aded in day-to-day ope\u00adra\u00adti\u00adons: who makes the purcha\u00adses, who are the cus\u00adto\u00admers, and are the\u00adre shared staff or busi\u00adness assets? It must be pos\u00adsi\u00adble to pro\u00advi\u00adde spe\u00adci\u00adfic ans\u00adwers to all the\u00adse ques\u00adti\u00adons. If in doubt, it is advi\u00adsa\u00adble to seek tax advice befo\u00adre the tax office deci\u00addes to tre\u00adat the busi\u00adnesses as a sin\u00adgle entity.<\/p>\n\n\n\n