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Are Startup Grants from EXIST-Program Business Income?
FG Münster had to decide a dispute between the tax office and a startup on April 13, 2018 (re 14 K 3906/14 F). The greedy tax office wanted to classify a grant as taxable income while the founders were not at all amused by a gift being taxed.
EXIST is a promotional program from the Federal Ministry of Economy and Energy and stands for startups from academica. This program aims, as does the Ministry, at promoting academics to open businesses as well as increasing the number and success of company formations in technology and knowledge.
Stipends are not Business Income for Taxation
In this case, a civil partnership received a stipend from their university for research in software technology. The tax office considered their stipend from the EXIST program as normal business income. The tax office Münster decided in favor of the students. Pursuant to §15 I 1 no. 2 EStG income from the partnership to one or more members of a partnership is generally subject to taxation. Here, the income in question did not come from the business but from the university. Therefore, this income is not subject to taxation at all.