Tax Advisor Explains: What You Need to Know About the Final Tax Return

Have you ever heard of a declaration of determination? The tax office may ask you to submit such a declaration. This typically affects business owners, but also individuals who jointly own a piece of property or form a community of heirs. While the declaration of assessment is generally known to only a few taxpayers, it may nevertheless become relevant at some point. That is why we have clearly summarized the most important information on this topic below in this article.

What is a declaration of assessment?

A declaration of assessment is used to determine income for tax calculation purposes. The declaration thus serves a simple yet necessary function in certain situations. The declaration of assessment is closely related to the annual income tax. As you may be aware, however, not every taxpayer comes into contact with this declaration. The declaration is potentially important only for sole proprietors and certain groups of private individuals or legal entities.

When does a declaration of assessment become relevant?

To better understand what the tax assessment declaration entails, we must examine the situations in which the tax office requires such a declaration. Who is required to file the declaration is governed by the Tax Code. Within this framework, there are two possible scenarios:

1. On the one hand, declarations of assessment must be submitted by sole proprietorships where the place of residence and the business location are geographically separate. In this case, two different tax offices are typically responsible for you. The tax office at your place of residence handles the standard tax return. The tax office at your place of business will request a declaration of assessment in order to ultimately report the data to the tax office at your place of residence.
2. The second scenario occurs quite frequently when private individuals form a partnership, for example, to manage an inheritance. The declaration of assessment clarifies the respective share of the partnership’s profit or loss. To illustrate, here is a classic example: Let’s look at a community of heirs in relation to a property. Several heirs of a rented property form a partnership to manage the income, etc. This raises the question of which income or losses can be attributed to the individual members of this community and are therefore relevant for tax purposes. The declaration of assessment is used to determine the individual’s share of the profit or loss.

It should be noted that, in individual cases, the tax office may waive the requirement for a declaration of assessment. This often happens when the facts of the case are straightforward and there are no conflicts within the community regarding the distribution. Therefore, if it is very clear how profits and losses are distributed, no declaration needs to be submitted, provided that the tax authority does not require one.

Separate and Uniform Determination

In cases involving sole proprietors, a separate determination is made. This means that the income is determined separately for the individual, i.e., the sole proprietor. For partnerships, a separate and uniform determination applies. Here, the distribution of profits and losses is first determined separately. Subsequently, the result is distributed uniformly among the various individuals.

How does the assessment declaration process work?

After the tax office has requested the assessment declaration, you, as the taxpayer, must first fill out the appropriate tax form. The form is sent to the responsible tax office or the tax office that made the request. Nowadays, this process is handled online rather than using physical forms. The assessment declaration is thus submitted on your part. The tax office will now issue an assessment notice and send it to you. Ideally, you will have this notice available when preparing the tax return based on it or the subsequent tax return so that you can enter the assessed income. If the notice is not yet available at the time of filing this tax return, you may also enter your own calculation. If there are discrepancies with the notice, the tax office will correct them subsequently.

What can you do if the notice contains an error?

Even the tax office can make mistakes. It is possible that the assessment notice contains an error. If you notice what you believe to be an error, you can file an appeal within one month.

Tax Consulting in Düsseldorf and Oberhausen

The assessment notice is not particularly complex in theory or practice. Nevertheless, taxpayers may be surprised by such specific demands from the tax office, leading to various questions. Filing an appeal can also occasionally be difficult. Therefore, if in doubt, you should always consult a tax advisor early on. With our offices in Düsseldorf and Oberhausen, we are your point of contact for all tax-related questions and concerns. You can rely on the experience and expertise of our team, ensuring you’re always on the right track when it comes to taxes. It is always easier to avoid mistakes than to correct them later. This is especially true when it comes to your taxes. So contact us today to schedule a consultation.