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Summary

In this video, tax lawyer Patricia Lederer delves into a unique legal case where a businessman is suing the tax office over the deduction of his luxury cars, a Lamborghini and a BMW 7 series, as business expenses. Despite maintaining that the Lamborghini is used exclusively for business, the tax office refuses to accept it due to its high cost. Lederer explains the complex issues of tax deductions for expensive cars, including the importance of accurate logbooks and the ongoing legal debate in Germany regarding the threshold for car expenses. The case is now in the hands of the Federal Fiscal Court, awaiting a landmark decision.

Takeaways

• 😀 A man is suing the tax office because he wants to deduct his Lamborghini and BMW 7 series from his taxes as business expenses.
• 😀 The tax office rejected his request, claiming that the car is too expensive and the travel logbook he submitted is illegible.
• 😀 The man argues that he uses the Lamborghini strictly for business, not for personal use, which is why he also owns a Ferrari for personal purposes.
• 😀 The tax office further argued that the Lamborghini's high price and leasing rate made it unsuitable to deduct from taxes, as it was seen as a luxury vehicle.
• 😀 The man provided original logbooks as proof of his business use, but the tax office dismissed them as unreadable, claiming they were scribbled and unclear.
• 😀 He re-submitted a neat transcription of the logbook but the tax office still rejected the deduction, accepting only one-third of the Lamborghini's costs for tax purposes.
• 😀 The case escalated to the Financial Court in Munich, which ruled that the Lamborghini's cost of €279,000 was too high to be considered a legitimate business expense.
• 😀 The man appealed the ruling and took the case to the Federal Fiscal Court, which is currently reviewing similar cases regarding luxury vehicles and their deductibility.
• 😀 The core issue under review is whether there is an unwritten price limit (e.g., €100,000) for business car deductions, especially for expensive luxury cars.
• 😀 Tax experts argue that entrepreneurs should have the freedom to choose and deduct their business vehicles based on their company’s finances, without arbitrary price limits on luxury cars.

Q & A

What is the central issue in the court case discussed in the video?

The central issue is a man suing the tax office for claiming that his Lamborghini, which he uses for business, should be tax-deductible. The tax office disagrees, stating that the car is too expensive and likely used privately.

Why does the tax office refuse to accept the man’s car as a business expense?

The tax office refuses because the Lamborghini is considered too expensive, with an acquisition cost of 279,000 euros and a leasing rate of 6,000 euros per month. The tax officials argue that such an expensive car has too high a private enjoyment factor to be classified as a business vehicle.

What is the man’s argument to justify using the Lamborghini for business purposes?

The man argues that he needs such an expensive car to maintain business contacts in places like Dubai and Abu Dhabi, where even taxi drivers use high-end vehicles like Lamborghinis. He also claims that his car is branded with his company’s logo for business promotion.

What was the outcome of the initial ruling in the court case?

The court ruled in favor of the tax office in the first instance, stating that the Lamborghini was too expensive to be considered a business vehicle and that it violated tax fairness principles.

What role does the man’s driving log (Fahrtenbuch) play in the case?

The driving log is a key element in proving that the Lamborghini was used for business purposes. However, the tax office claimed that the man’s log was illegible and insufficient to validate the business use of the car.

Why was the man’s Fahrtenbuch initially rejected by the tax office?

The tax office rejected the Fahrtenbuch because it was poorly written and difficult to read. The official argued that the entries were illegible and didn’t provide adequate proof of business use.

What did the man do after the Fahrtenbuch was deemed illegible?

After the Fahrtenbuch was rejected, the man created a clean, legible transcription of the entries, which he submitted to the tax office. However, even with the revised version, the tax office maintained its stance.

What is the significance of the 100,000 euro threshold in this case?

The 100,000 euro threshold is considered a limit by tax officials for the purchase price of a car to be considered acceptable for business use. Anything above this price is deemed a luxury vehicle and therefore not deductible from taxes.

What is the man’s strategy to challenge the tax office’s decision?

The man appeals to higher courts, including the Federal Fiscal Court (Bundesfinanzhof), arguing that the 100,000 euro threshold for luxury cars is outdated and should not apply in modern business contexts.

What advice does Patricia Lederer, the lawyer, give to people in similar situations?

Patricia Lederer advises individuals to file an objection if their car expenses are rejected by the tax office. She emphasizes that this is their right and could potentially benefit from ongoing proceedings at the Federal Fiscal Court.