Administrative Advisory Board: Voluntary work with tax traps for owners!

Administrative Advisory Board: Voluntary work with tax traps for owners!

Owners in homeowners' associations (WEGs) are increasingly becoming involved on a voluntary basis as administrative advisors. This position entails a variety of tasks, including reviewing billing and assisting with property management. The administrative advisory board also acts as a link between owners and managers. According to T-Online, administrative advisory boards generally do not receive any remuneration for their work. However, their expenses are not completely ignored. In practice, many WEGs grant flat-rate or specific compensation for actual expenses, which include, for example, postage, telephone costs or travel costs.

A special tax rule applies to these cost reimbursements: While proof of actual expenses is tax-free, flat-rate payments without individual offsets are considered taxable income and must be stated in the tax return. There is an important exemption limit to note: Income below 256 euros per year is tax-free as long as it cannot be assigned to any type of income. Another important detail is that regular remuneration can be classified by the tax office as commercial or self-employed activity. As a result, administrative advisors cannot claim their own costs, such as travel expenses or office supplies, for tax purposes, since they do not formally earn taxable income.

Claims for expenses and compensation

Although the administrative advisory board generally works free of charge, there is a legal right to reimbursement of expenses. Reimbursement can be made either through a lump sum amount or through specific, documented expenses. The Munich District Court has ruled in a ruling that an appropriate flat-rate allowance for expenses is around 100 euros per year per person. Payments over 500 euros per year could be classified as excessive. However, there is no legal standard that prescribes specific amounts for reimbursement of expenses.

The legal framework for the remuneration of administrative advisors is anchored in the Condominium Act. Section 29 (2) WEG states that the administrative advisory board supports the property manager, but without introducing a remuneration regulation. Decisions on remuneration can be made by resolution at the owners' meeting or via a circular resolution. The relationship between the administrative advisory board and the community of owners is viewed as a contractual relationship, which is regulated by the provisions of the Civil Code (BGB).

It is important to note that the expense allowances granted to the administrative advisory board are taxable. Reimbursement of expenses, which relates to specifically proven expenses, is not subject to tax. When carrying out their work, administrative advisors must not forget that their services are generally free of charge, but they are still entitled to reimbursement of expenses.