Are agricultural by-products taxable?

The tax ABC for beekeepers

Farmers who keep bees and sell their honey don't have to fear the tax office. On the contrary: you benefit from numerous tax advantages.

Our authors

Stefan Heins, Katharina Ide and Freya Bennemann, wetreu Kiel

Stefan Heins, Katharina Ide and Freya Bennemann, wetreu Kiel

Stefan Heins, Katharina Ide and Freya Bennemann, wetreu Kiel

Quite a few farmers are toying with the idea of ​​keeping bees themselves - be it for image reasons, to support the pollination of important crops such as rapeseed or to sell the honey in the farm shop. What hardly anyone knows: There are hardly any taxes on the income from direct marketing. We have summarized what you should pay attention to in our tax ABC for beekeepers.

A) Setting up a company

Should I start my own beekeeping business?

Answer: Basically, you can treat beekeeping like another branch of the business. You don't have to found your own company for this. However, if you are required to keep accounts and have fewer than 71 colonies, it can pay off to set up your own business. Because then you do not need to create time-consuming bookkeeping and you can use flat rates for determining profits. You can find more about this in the section on determining profits on the right.

However, as a farmer who is required to keep accounts, you should not set up the business yourself. Because as an entrepreneur you are not allowed to determine your profit with different methods - not even if you own several companies. It is therefore not allowed to “keep records” for the agricultural farm and to choose another method for beekeeping. So your spouse or someone else has to take over the beekeeping.

B) Determination of profits

How do I determine the profit?

Answer: It depends on whether you are required to keep accounts or not and whether you have set up your own beekeeping business:

A) Farmers subject to accounting obligations who keep their beekeeping in their farms. Have integrated the farm: You must also create double-entry bookkeeping for the beekeeping (overview 1).

B) Farmers who are not required to keep accounts and all those who run their beekeeping as an independent business: Here, the number of colonies decides the method:

  • With up to 30 peoples, you can save yourself the calculation of profits and pay no income tax - no matter how much you earn.
  • With 31 to 70 peoples you set a flat profit of 1000 € / year (13a method). Exception: If you not only market your own goods, but also honey or, for example, mead from other companies, you must determine the profit for third-party products separately. To do this, you deduct a flat rate of 60% from the income as business expenses. What remains is the profit. You can find an example of this in overview 2.
  • With 71 peoples and more you are not allowed to use the general method. Here you have the choice between double entry bookkeeping or the income excess calculation.

Attention: If you determine your profit for your farm using the 13a method and keep 71 or more bee colonies "on the side", you lose your status as a 13a farmer and have to switch to income accounting or bookkeeping altogether.

C) Income tax bonus

Are there any other tax breaks?

Answer: You are allowed to deduct an income tax allowance of 900 € / year from the profit of the beekeeping (1800 € / year for a spouse's assessment). However, only if the total of your income (from agriculture and beekeeping) does not exceed € 30,700 / year (€ 61,400 / year for spouses).

D) Deduct losses

If I apply an average rate profit using the 13a method, can I still deduct business expenses?

Answer: no. If you are applying an average rate profit, you are not allowed to deduct beekeeping expenses. However, you are not bound to the calculation of the average rate profit. You can switch to the income excess calculation if you are not required to keep accounts. To do this, submit an application to the tax office. You must submit this no later than twelve months after the end of the financial year to which you are referring. Example: You want to apply for a change for the current financial year. That ends on June 30th, 2019. The application must therefore be submitted to the tax office by June 30, 2020.

If you have decided to switch, you are bound to it for the year in which you submitted the application and for a further three years. You should therefore sound out carefully whether a change actually pays off.

E) Commercial trap

What do I have to consider if I sell not only my own goods, but also those from other companies?

Answer: The income from non-company products belongs to that from “agricultural commercial activities”. You are only allowed to use these as "normal" agricultural and forestry. Record income as you adhere to certain limits. The revenues from the sale of the external goods together with other commercial income such as that from a solar system or wage labor may not:

  • make up more than 1/3 of the total turnover of your agricultural and forestry business or
  • be more than € 51,500 / year.

If you do not comply with these requirements, the income from the sale of the non-company products will be commercial. On the other hand, not those from the sale of the self-produced honey. You will then achieve landw next to each other. and commercial income. Consequence: You have to pay trade tax. However, you are entitled to an exemption of € 24,500 / year.

Attention: If you operate as a partnership, for example as a GbR or limited partnership, stricter rules apply. If you exceed the limits described above, it will rub off on your agricultural income. Then all income of the GbR or KG count as commercial sales.

F) hobby

The tax office often assigns beekeepers a "hobby". What do you mean with that?

Answer: If the tax office suspects that you are just doing beekeeping as a hobby and have no intention of making money with it, it is called a hobby in tax law. You are then not allowed to offset any losses from hobby with other positive income - even if you keep accounts for the beekeeping or make an income surplus calculation.

Especially in the early stages of beekeeping, it can happen that the tax office confronts you with this accusation. Because then the operating expenses are often significantly higher and the sale of the honey may start off rather slowly. But you can defend yourself against this. Call in your tax advisor and work with him to draw up a total profit forecast for the next few years, in which you can prove that you want to make long-term profits.

G) sales tax

As a beekeeper, can I set a flat rate for sales tax?

Answer: In principle, beekeeping and the sale of honey and by-products are subject to sales tax - even if you keep fewer than 31 bee colonies, i.e. you do not have to pay income tax. You have to charge 7% VAT for honey from your own production or bought-in honey. For by-products like mead 19%.

Anyone who applies a flat rate of VAT can show the average tax rate of 10.7% for sales with their own honey. Incidentally, those who have set up their own beekeeping business also have this option.

However, the following applies to all generalizers: If you also market non-company products in your farm shop, you have to show VAT for the sale of these goods. You pay the sales tax that you receive to the tax office. In return, you can at least have the input tax reimbursed from the purchase of the merchandise. In practice, your claims will be offset against those of the tax office.

Please note: If you also operate a photovoltaic system or, for example, a contractor in addition to your beekeeping, you only need to submit one advance VAT return or declaration for all branches of business.

H) mixed products

Which tax rate applies if I mix my own honey with someone else's honey?

Answer: If the self-produced honey is mixed with purchased honey, the tax rate is 10.7%, as long as the addition of the purchased product does not exceed 25%. If you do not adhere to this limit, you will have to charge the regular tax rate of 7% for the mixed products.

I) VAT exemption

Can I also get exempt from sales tax?

Answer: If your total turnover in agriculture and beekeeping did not exceed € 22,000 in the past calendar year, you can be exempted. To do this, submit an application to the tax office. Important:

  • For the calculation of the € 22,000 limit, you must use the income including sales tax for the calculation and
  • If you are exempt from sales tax, you must point out on the receipts or receipts that you are subject to the small business regulation according to §19 UStG.

J) Social Security

Do I have to pay more social security contributions when I start beekeeping?

Answer: Everyone who keeps bees next to their farm has to pay into the accident insurance of the social insurance for agriculture, forestry and horticulture (SVLFG). Non-farmers are required to pay contributions if they keep more than 25 colonies. The contributions are calculated individually. In the agr. Old age and health insurance only have to pay in companies with more than 100 peoples.

K) cash register

Anyone who sells honey needs a cash register. What is to be considered?

Answer: Either you buy an electronic cash register. However, they are expensive. Or you can use an “open till”. This means that you note your income in a cash book and keep the money in an open cash register - without the use of technical aids. You can find out exactly what you should pay attention to in the 3/2016 top agrar issue from page 42.

L) Receipt

Since the beginning of January 2020 there has been an obligation to provide evidence. What does that mean?

Answer: If you use an electronic cash register, you have to create a receipt for each transaction. But your customer doesn't have to take it with them. This does not apply to open cash registers.

M) mandatory information

What must be included on the receipt or the invoice?

Answer: Invoices for purchases with a maximum value of € 250 are considered to be small value invoices. All you have to do is enter your name or company name, the date of purchase, the name of the product, the quantity, the price and the tax rate. Please note: You must also enter information about the invoice or transaction number and the serial number of the electronic cash register system or the number of the security module on a receipt.

N) give colonies to bees

What do I have to consider when lending bee colonies to colleagues for pollination?

Answer: You can tax the income like any other income from your farm. There are no special features here.

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