Cologne (dpa/lnw) – Companies that grant their employees additional free working days in the form of retirement can form a tax-reducing provision for this. This was decided by the Cologne Finance Court according to a judgment published on Friday (12 K 486/20).
The plaintiff had granted its employees over 60 years of age with more than ten years of service an additional annual entitlement to paid time off in addition to their contractual annual vacation. During an audit, the responsible tax office rejected the tax-reducing consideration of the provision because the formal requirements for this were not met. In particular, the beneficiary employees would not have provided any additional services that the company would have to pay for.
The plaintiff defended herself against this at the Cologne Finance Court and was successful in the first instance. However, the decision is not yet final, as the tax office has filed an appeal, which is being conducted at the Federal Fiscal Court in Munich.
The judges of the 12th Cologne Senate ruled on November 10 that the plaintiff could set up a provision for uncertain liabilities. The plaintiff made a binding commitment to grant further days off. The employees would make an advance payment with their manpower, but the corresponding consideration would only be provided by the plaintiff in the future.
Thus, the company’s obligation to grant additional days off had already arisen before the start of the leave and was economically caused. This does not conflict with the fact that the commitment is linked to the past service and the future loyalty of the individual employees.
