Parcel delivery service – takeover – warning money – wages

Warnings, fines, etc.

may not normally be deducted as operating expenses or income-related expenses (cf. Sec. 4 (5) No. 8 and Sec. 9 (5) EStG). If an employer reimburses its employee for fines, the employer shall
The question arises as to whether the reimbursement is to be treated as taxable wages for the employee. According to an older ruling of the Federal Fiscal Court, there is no wage subject to wage tax if an employer who operates a parcel delivery service pays the warning fines caused by its drivers (for violating the no-stopping rule) for reasons that are predominantly in its own business interest.

In a recent ruling by the court

on the other hand, the assumption by a freight forwarder of fines imposed on its drivers for violating driving and rest times was treated as wages; in this case, the employer’s own business interest was denied.

In the meantime, a tax court has followed the older case law of the Federal Fiscal Court and ruled in favor of a parcel delivery service that had not treated the warning fees paid to its drivers for parking violations as wages. However, the case in dispute had special features: The warning fines were assessed against the parcel delivery service and not against its drivers; the employer, which operates nationwide, had applied for exemptions under Section 46 of the German Road Traffic Act in several cities, which allowed short-term stops for loading and unloading in otherwise unauthorized areas such as no-stopping zones or pedestrian zones. In the opinion of the Tax Court, the payment of warning fines for employees parking illegally while delivering parcels did not result in taxable wages because it was made in the very predominant interest of the company itself.

An appeal has been lodged against this decision; the outcome of the proceedings remains to be seen.

(Further comments & information on this can be found in our information letter 07/2018 under the item 5.)