Fact check Collecting returnable bottles: taxable, or not? This is what you should know!

Many people in Germany have switched to collecting deposit bottles to supplement their income, especially when other sources of income such as salary, citizen's allowance, pension or other benefits are not sufficient to cover their living expenses. But is there really a risk of having to pay taxes with such an activity? And under what conditions?

Collecting returnable bottles: commercial activity, or not?

A spokesman for the North Rhine-Westphalia Ministry of Finance pointed out in an interview with the Rheinische Post that deposit bottle collectors may be viewed as commercial entrepreneurs. The reason for this is that collecting deposit bottles is in a certain way an independent, sustainable activity aimed at making a profit.

If the relevant criteria are met and the collection of returnable bottles is classified as a commercial activity, the income from this must be declared in the income tax return. This income must then be stated in Appendix G.

The criteria for a commercial activity that can lead to tax liability according to Section 15 Paragraph 2 EStG are as follows

• Independent management
• Continuous commitment
• Intention to make profits
• Participation in general economic transactions
• Not classified as freelance or agricultural and forestry activity
• Exceeding the scope of private asset management

Collecting deposit bottles: When are taxes due?

Classification as a commercial activity does not necessarily mean that taxes have to be paid. The spokesman for the Ministry of Finance pointed out that income from collecting returnable bottles is only taxable if it exceeds the so-called basic allowance.

The basic allowance is an amount that is set annually and is considered tax-free and is intended to represent the subsistence minimum. For 2023, the basic tax allowance was increased to 10,908 euros, and a further increase to 11,604 euros is planned for 2024.

Therefore, please note the following: If you earn more than the set basic allowance in one year by collecting returnable bottles, you must pay tax on the difference. If the exemption amount is not exceeded, there is no tax liability.

Fact check: Tax aspects of collecting deposit bottles

Many questions often arise in connection with collecting returnable bottles, especially in relation to possible tax obligations. This fact check examines various aspects of this topic in more detail.

Fact 1: Collecting deposit bottles as a commercial activity

According to the North Rhine-Westphalia Ministry of Finance, collecting returnable bottles can be classified as a commercial activity under certain conditions. This depends on various criteria such as independence, sustainability, intention to make a profit, participation in general economic activity, non-assignment to freelance or agricultural and forestry activity and exceeding the scope of private asset management.

This classification depends heavily on the individual case and usually requires an individual assessment by the tax office or a tax advisor.

Fact 2: Tax liability if the basic tax allowance is exceeded

The basic allowance is a tax-free income amount that is determined every year by the Federal Ministry of Finance. In 2023, this amount will be 10,908 euros and will be increased to 11,604 euros in 2024.

If the total income from collecting returnable bottles and other sources of income exceeds this amount, the difference is generally taxable.

Fact 3: Tax registration of income

If collecting returnable bottles is classified as a commercial activity, the resulting income must be declared in the income tax return. This income should then be entered under “Appendix G”.

Fact 4: No tax liability if the basic tax allowance is not exceeded

If the income from collecting deposit bottles and other sources of income does not exceed the basic tax allowance, there is no tax liability for this income. This applies regardless of whether collecting returnable bottles is classified as a commercial activity or not.

Conclusion: Although collecting returnable bottles can result in taxable income, this depends heavily on the individual circumstances and the overall income of the person concerned. In cases of doubt, professional tax advice should always be sought.

Sources:

MainPost
Allgäuer Zeitung

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