Employee credit balances are generally invested in fixed-interest investments or in capital market-dependent products such as publicly authorised investment funds. This inevitably results in different income components for the obligated company, which require or necessitate differentiated accounting treatment.
The relevant valuation principle for the German commercial balance sheet – and also for the German tax balance sheet via the authoritative principle – is the gross principle (Section 5 (1) EstG (Income Tax Act)). This means that the assets and liabilities must be valued individually and not netted, at least for tax purposes (the introduction of the BilMoG (German Accounting Law Modernisation Act), however, makes it possible to net them under commercial law, although this may still not be done under tax law). If the employer now invests the assets in investment portfolios, this means for the assets side that the fund or securities assets are to be valued at acquisition cost in accordance with § 255 (1) HGB (German Commercial Code). This acquisition cost principle follows from the realization principle, according to which only realized gains may be reported (§ 252 (1) No. 4 HGB). In accordance with the acquisition cost principle, assets must therefore always be stated at acquisition or production cost. In this respect, no consideration is given to increases in the value of assets before they leave the company’s assets (here: sale of securities).
On the other hand, impairments in value as an expression of the so-called imparity principle must be taken into account in the valuation of current assets (so-called “strict principle of the lower of cost or market” pursuant to § 253 (3) HGB). This lower of cost or market principle is restricted in the tax balance sheet to the effect that impairments in value must only be taken into account or written down to the so-called partial value if a probable permanent reduction in value is to be expected (principle of prudence pursuant to § 252 para. 1 no. 4 HGB in conjunction with § 6 para. 1 no. 2 EStG).
According to the above explanations, the following comparison can be made between the assets and liabilities sides of the balance sheet for the formation of credit balances and the related investment in securities:
The employee is entitled to the value of the securities or the fund at maturity. Pursuant to § 253 (1) HGB in conjunction with § 266 (3) HGB, this liability must be recorded in the balance sheet. As there is no acquisition cost for liabilities as there is for receivables, the claim for performance pursuant to § 253 (1) HGB is decisive for the valuation of monetary liabilities. As a rule, this corresponds to the nominal amount or the market or current market value. The consequence of this is that the market value on the balance sheet date and on the assets side, if no permanent impairment has occurred, the acquisition value of the securities must be used as the liability value.
If, however, the respective credit balances are not invested in securities-linked investments but in fixed-interest investment forms, the taxable income constellations for the management of working time accounts are modified. This is because in the context of these cases, immediately taxable interest income – so-called withholding taxes – is basically accrued.
Interest therefore accrues in the context of investments in credit balances, e.g. in the investment of savings or fixed-term deposits within the meaning of § 20 Para. 1 No. 7 EStG. Interest is the “fee” for which a creditor transfers certain assets to a “debtor”. In the case of working time accounts, this would mean, for example, the interest paid on the assets invested with a bank by the employer in the form of fixed-term deposit products. Such interest income within the meaning of § 20 (1) no. 7 EStG is subject to a uniform capital gains tax of 25% (plus solidarity surcharge). This capital gains tax is to be understood as an advance payment on the individual tax burden of the company, which is credited to the assessment.