In its ruling of 25 June 2026 (Case III R 35\/23), the German Federal Fiscal Court (Bundesfinanzhof, BFH) addressed an important tax issue in insolvency proceedings: under what circumstances can the fees of an insolvency administrator be deducted as business expenses?<\/p>\n
The Court confirmed that such costs may be tax-deductible if the administrator’s work relates to the settlement of business liabilities. The fact that an insolvent debtor has both business and personal debts does not automatically exclude a tax deduction.<\/p>\n
Insolvency Administrator Fees: Which Costs Can Be Deducted?<\/b><\/p>\n
Insolvency proceedings involve various expenses associated with managing and liquidating the debtor’s assets. One of these expenses is the remuneration paid to the insolvency administrator (Insolvenzverwalter).<\/p>\n
However, the tax treatment of these costs is not always straightforward. Where the debtor has both business-related and personal liabilities, it is necessary to determine which portion of the administrator’s fees is attributable to business activities.<\/p>\n
In the case before the Court, provisions for the administrator’s remuneration had been recognised in the tax accounts for the years 2015 to 2017. The tax authorities refused to accept these amounts as deductible business expenses. The Fiscal Court of Rhineland-Palatinate upheld that decision.<\/p>\n
The BFH overturned the lower court’s judgment and referred the case back for further examination.<\/p>\n
What Did the BFH Decide?<\/b><\/p>\n
The BFH ruled that insolvency administrator fees may qualify as current or subsequent business expenses to the extent that the administrator’s activities are connected with the settlement of business liabilities.<\/p>\n
This means that where insolvency proceedings involve both business and personal debts, the administrator’s entire remuneration cannot automatically be excluded from tax deduction.<\/p>\n
If the business-related portion of the expenses can be reasonably identified, that amount may be deducted when calculating taxable profits. Where an exact allocation is not possible, the deductible portion may, under certain circumstances, be determined by a reasonable estimate.<\/p>\n
The decisive factor is therefore not simply the existence of insolvency proceedings, but the nature of the administrator’s work and its connection to the debtor’s business activities.<\/p>\n
Can the Expenses Be Deducted Before Payment?<\/b><\/p>\n
The ruling also addresses whether a provision can be recognised for the insolvency administrator’s remuneration before the amount has been finally determined or paid.<\/p>\n
The BFH confirmed that such a provision may generally be recognised if the debtor is legally entitled to determine taxable profits using the balance-sheet accounting method and the relevant statutory requirements are met.<\/p>\n
However, this does not mean that a provision can be created in every case. It must first be established whether the debtor was entitled to use balance-sheet accounting during the relevant tax years and whether the other conditions for recognising a liability were satisfied.<\/p>\n
The lower court must examine these issues in further proceedings.<\/p>\n
If the debtor was not entitled to use balance-sheet accounting, the creation of a provision would not be permitted. In that case, the expenses would generally become deductible only in the year in which the administrator’s remuneration is actually paid.<\/p>\n
What Does This Ruling Mean for Business Owners?<\/b><\/p>\n
The BFH decision is particularly relevant for business owners whose insolvency proceedings involve both commercial and personal liabilities.<\/p>\n
It confirms that the tax treatment of insolvency administrator fees requires an individual assessment. The connection between the expenses and business activities, the possibility of allocating the costs and the applicable accounting method all play an important role.<\/p>\n
Business owners and insolvency administrators should therefore carefully examine whether the requirements for a full or partial tax deduction are met and whether a provision can be recognised for tax purposes.<\/p>","protected":false},"excerpt":{"rendered":"
In its ruling of 25 June 2026 (Case III R 35\/23), the German Federal Fiscal Court (Bundesfinanzhof, BFH) addressed an important tax issue in insolvency proceedings: under what circumstances can the fees of an insolvency administrator be deducted as business expenses? The Court confirmed that such costs may be tax-deductible if the administrator’s work relates […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[1093,15,1099,1101,183,1100,1098,1092,1094,425,428,1095,1096,195,434,1097],"class_list":["post-841","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-betriebsausgaben","tag-bfh","tag-business-expenses","tag-corporate-insolvency","tag-germany","tag-insolvency-administrator","tag-insolvency-law","tag-insolvenzrecht","tag-insolvenzverwalter","tag-steuerrecht","tag-tax-law","tag-unternehmensinsolvenz","tag-bankrotstvo","tag-germaniya","tag-nalogovoe-pravo","tag-predprinimatelskie-rashody"],"acf":[],"_links":{"self":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts\/841","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/comments?post=841"}],"version-history":[{"count":1,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts\/841\/revisions"}],"predecessor-version":[{"id":842,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/posts\/841\/revisions\/842"}],"wp:attachment":[{"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/media?parent=841"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/categories?post=841"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sugrobov.de\/en\/wp-json\/wp\/v2\/tags?post=841"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}