Guarantee commission can increase debt interest in the event of over-withdrawals

A guarantee commission can be counted as non-deductible debt interest, which must be taken into account in the context of the over-withdrawal rule.

In order to prevent private debt interest from being shifted to the business, the law stipulates that business debt interest is only partially deductible if excess withdrawals were made in the financial year, i.e. more withdrawals were made than the profit and deposits incurred. The Federal Fiscal Court has ruled that commissions and fees for a bank guarantee, i.e. the guarantee by a bank, count as interest on debt in any case if this secures the repayment of borrowed capital that was temporarily made available to the debtor for use.

This affects petrol stations, for example, which are regularly obliged by oil companies to secure their stock of goods and the fuel sold by means of a bank guarantee. If the guarantee only serves to secure the timely payment for the goods provided, there is no debt interest. If, on the other hand, the entrepreneur can use the proceeds elsewhere until they are transferred to the supplier and therefore has to use fewer of his own funds, this also constitutes a transfer of borrowed capital, which turns the guarantee commission into interest on debt.