Definition and significance of the determination of tax bases
Die Determination of tax bases refers in German tax law to an independent administrative act through which certain tax-relevant facts or values are ascertained that are decisive for the assessment and collection of taxes. The determination serves as a legally binding preliminary decision on facts, amounts, or legal relationships that are to be used as the basis for subsequent tax assessments. The statutory regulations on this can be found in particular in sections 179 to 182 of the German Fiscal Code (Abgabenordnung, AO).
Distinction from tax assessment
In contrast to the tax assessment, where the specific tax liability of an individual is determined for a given period, the determination of tax bases usually addresses preliminary issues whose clarification may be relevant for several taxpayers or for multiple types of taxes. Notices of determination are often issued in connection with joint circumstances, such as partnerships or communities of heirs.
Legal basis for the determination of tax bases
General provisions (§§ 179-182 AO)
The Fiscal Code regulates the determination of tax bases in the third section of the first part, specifically in §§ 179-182 AO. Section 179 AO establishes in which cases determinations are to be made through their own determination notice. Sections 180 and 181 AO define which bases must be determined separately and, if applicable, uniformly, and how the administrative procedure for this must be structured.
Separate and uniform determination (§ 180 AO)
According to § 180 AO, those tax bases must be determined separately and uniformly that are relevant for the taxation of several persons (e.g., in partnerships, communities of heirs, or atypical silent partnerships). This ensures that the facts and value assumptions underlying later tax assessments are taken into account uniformly and bindingly for all affected taxpayers.
Binding effect of determination notices (§ 182 AO)
According to § 182 (1) AO, determination notices are binding on the tax authorities as well as the courts in regard to the determinations made within the notice. This binding effect also extends to subsequent taxation procedures, so that the bases examined in the determination notice are not subject to separate review in the subsequent tax assessment.
Areas of application of the determination of tax bases
Partnerships and partner enterprises
A classic example of the determination of tax bases is the allocation of profits in partnerships. The total profit or loss of a partner enterprise is distributed among its partners and determined within the framework of a separate and uniform determination notice.
Joint legal relationships
In communities of heirs and other communities without their own legal personality, it is also necessary to determine the tax bases attributable to the participants individually by means of a binding notice.
Atypical silent partnerships and trust relationships
In the case of atypical silent partnerships and certain trust relationships, a separate and uniform determination is also carried out to precisely quantify the tax-relevant interests of those involved.
Other cases of separate determination
Furthermore, other circumstances are also covered by the determination obligation, for example, regarding income from joint investments or in the case of property partnerships.
Procedure for the determination of tax bases
Parties involved and issuance of the determination notice
The determination notice is issued to all persons whose tax interests are affected. In the case of a partnership, this would be, for example, each individual partner. The notification is made in accordance with §§ 122 ff. AO.
Appeals procedure and legal remedies
An appeal procedure in accordance with §§ 347 ff. AO is available against a determination notice. Third parties whose tax interests are affected by the determination notice also have the right to appeal. Decisions from the determination procedure can thus be challenged in a separate out-of-court and, if necessary, judicial procedure.
Legal consequences and significance in the taxation procedure
Pre-effect for tax assessments
The determinations contained in the determination notice are binding for subsequent tax assessments concerning the affected taxpayers. The tax authority is generally prevented from deviating from the statements made in the determination notice.
Limitation and possibilities for amendment
Separate limitation and amendment periods apply to the determination of tax bases (§§ 169 ff. AO). Changes to the determination notice (e.g., due to new facts or clear errors) take place analogously to the provisions governing the amendment of tax assessments.
Special features in the case of joint assessment
In the case of jointly assessed spouses, it may occur that separately determined tax bases must be allocated to both spouses. The corresponding differentiation is made within the income tax assessment, taking into account the determination notice.
Summary
Die Determination of tax bases is a central element of tax procedural law in Germany. It ensures the uniform and fair allocation of tax-relevant circumstances, especially when multiple persons or types of taxes are involved. The statutory provisions of the Fiscal Code provide clear procedural rules, the correct application of which is essential for the legal certainty of taxation. The determination procedure thus differs from the actual tax assessment, but it is directly binding on subsequent tax procedures.
Literature references
- Tipke/Kruse, Abgabenordnung – Finanzgerichtsordnung, Commentary
- Klein, Abgabenordnung, Commentary
- Schenke, Taxation Procedure, Practitioner’s Commentary
Further links
- Text of the Fiscal Code (AO), §§ 179-182 – gesetze-im-internet.de
- Federal Central Tax Office – Information on determination notices
This article was created with the aim of providing the most comprehensive presentation possible, taking into account all legal aspects. It is intended for persons seeking well-founded information on the determination of tax bases in German tax law.
Frequently Asked Questions
Who is responsible for the determination of tax bases?
In principle, the tax authorities (especially the competent tax office) are responsible for the determination of tax bases according to the provisions of the Fiscal Code (AO). In cases where several people are involved in economic activities (for example, in partnerships or communities), this is often carried out as part of a separate and, if applicable, uniform determination procedure (§§ 179 ff. AO). The responsible authority then issues a determination notice, which is binding for further tax assessments. The aim is to create a uniform basis for taxation and to avoid double or multiple consideration of the same facts.
Why is there a separate and uniform determination of tax bases?
The separate and uniform determination of tax bases serves to centrally and bindingly ascertain and establish tax-relevant circumstances in which several persons are involved. This particularly concerns profits and losses in partner enterprises, communities, fractional ownership communities, and communities of heirs. The uniform determination ensures that the tax bases are used uniformly by all parties involved, preventing contradictory assessments. Further, it creates procedural efficiency and legal clarity, since potential disputes over the attribution of facts or determination criteria do not have to be conducted in multiple individual proceedings.
What are the legal consequences of a determination notice?
A determination notice pursuant to §§ 179, 180 AO has a binding effect in regard to the determinations it contains. This means that the tax office responsible for the actual tax assessment is bound by the tax bases established in the determination notice. As far as the same tax bases are used in the course of a tax assessment, they may no longer be independently reviewed or determined differently. The determination notice itself can be independently appealed (objection, legal action), regardless of the later tax assessment.
When is the determination obligation for tax bases required by law?
The determination obligation results in particular from §§ 179 and 180 AO. According to § 180 (1) sentence 1 no. 2a AO, a separate and uniform determination is required when income is generated in which several persons are involved and which must be attributed to them for tax purposes. In addition, there are other statutory determination obligations, such as for tax bases relevant for the application of special tax reductions, allowances, or the calculation of the trade tax base amount. The determination obligation thus arises from the purpose of creating a uniform basis for taxation as required for the proper conduct of the taxation procedure.
Which forms of participation are typically subject to a determination procedure?
Types of participation commonly subject to determination procedures particularly include partnerships (such as OHG, KG, GbR), atypical silent partnerships, communities of heirs, property partnerships, and fractional ownership communities. In certain cases, other types of communities (e.g., in succession or with co-ownership of real estate) may also be subject to the determination obligation. The decisive factor is always whether several tax-relevant persons are jointly involved in the same income or shares and a uniform allocation must be made.
How is the procedure for the determination of tax bases regulated?
The procedure follows the provisions of the Fiscal Code (§§ 179 ff. AO) and is largely independently structured. The declaration regarding the tax bases must be submitted jointly by the participants or by an authorized representative. The tax authority reviews the declaration, conducts further investigations if necessary, and then issues the notice. Before issuing the notice, the participants are usually to be heard and must be granted the right to a fair hearing. The determination notice is given to all participants. The usual remedies (appeal, if necessary subsequently, legal action) are available against the determination notice. Particular attention must be paid to participant status: Third parties whose tax interests are affected may, under certain circumstances, also participate in the procedure.
How does a reservation of review or an amendment of the determination notice affect the tax assessment?
A determination notice issued under the reservation of review (§ 164 AO) can be amended as long as the determination is subject to that reservation. Any amendments resulting from a substantive or legal reassessment must be compulsorily carried over into the subsequent tax assessment. If the determination notice is revoked or amended, the tax office responsible for setting the tax must adjust the corresponding tax assessment (so-called ‘Grundlagenbescheid’ function, § 175 (1) no. 1 AO). The tax assessment must be changed to that extent, without the need for further independent determinations. Restrictions may arise due to the expiry of the limitation period or specific procedural provisions.
