Overvoltage – private property – power line

As part of the expansion of the power grid, it is also necessary to span private properties with high-voltage lines. In most cases, the network operator and the landowner reach an agreement on a permanent – unlimited – right of use for the operator, which allows the landowner to avoid partial expropriation. As a rule, the agreement is implemented by entering a limited personal easement in the land register against payment of a one-time compensation.

Until now, it was questionable whether this one-time compensation would result in taxable income for the private property owner.

The Federal Fiscal Court

does not consider such compensation to be taxable income, according to a recent decision.

By encumbering the land with an easement, the consideration may in principle be regarded as income from rental and leasing; however, this does not apply if the use is unlimited in time. In this case, the owner is definitively limited in his ownership rights.

The court

also does not consider the compensation to be taxable other income within the meaning of Section 22 No. 3 of the German Income Tax Act (EStG), since the owner definitively relinquishes a right similar to a sale. Accordingly, the income is to be allocated to the non-taxable private sphere of wealth.

(For further comments and information, please see our Information Letter 12/2018).