Audit reports
You are here: Home / Audit reports / Products / Annual Reports / 2019 - Spring Report / General Fiscal Administration / 15 / 2019 spring report – reporting item No. 15 "Finally develop uniform regulations on non-deduction of fines from taxable income"

Document Actions

2019 spring report – reporting item No. 15 "Finally develop uniform regulations on non-deduction of fines from taxable income"

Apr 02, 2020

Fines are subject to diverging tax treatment. Taxpayers may not deduct fines imposed by national authorities, EU member states or EU institutions from operating expenses. Conversely, fines imposed by third countries are tax-deductible and reduce taxable income.

Such unequal tax treatment causes losses in tax revenue. It may also lead to distortions of competition and lower the deterrence impact of the fine. So far, tax deductions have been generally prohibited for monetary penalties only. We hold that, as a rule, monetary sanctions of whatever type must not lower taxable income in any way. The Federal Ministry of Finance should take prompt action to submit to the legislator draft uniform statutory provisions that generally prohibit tax deduction of fines.

© 2020 Bundesrechnungshof