Cash-Basis Income Statement: How Freelancers Prepare the EÜR

In the cash-basis income statement (EÜR) for freelancers you document your income and expenditure in a clear and structured way. From this you calculate your profit, on which you pay tax. This method is based on the cash-receipts and cash-payments principle, whereas double-entry bookkeeping involves a comparison of business assets. The EÜR reduces your workload — but there are certain requirements you need to observe!

The state allows all freelancers to prepare an EÜR — the only requirement is that your self-employed activity falls within the liberal professions. It must be either a catalogue profession (Katalogberuf) or a comparable profession. Factors such as turnover and the level of profit are irrelevant. Even freelancers with annual turnover running into several million euros and a high profit may submit a cash-basis income statement (EÜR) to the tax office.

In some cases, however, it is advisable to choose double-entry bookkeeping voluntarily and to prepare a balance sheet. This applies in particular to freelancers who make substantial investments in fixed assets.

Double-entry bookkeeping and the preparation of a balance sheet give you a clearer overview of your financial and asset position. Ask your contact at Guhr Steuerberatung whether you should take on this additional effort!

The EÜR shows transparently how much profit freelancers generate in a year. Profit is derived from the difference between cash receipts and cash payments. Receipts include all business income; payments include all business expenses (Betriebsausgaben), including depreciation.

In the EÜR for year X you record receipts and payments that actually took place in year X. Invoice dates are irrelevant. Two examples illustrate this:

• You issue an invoice to a client in December 2022 and the payment reaches your account in February 2023: the money is therefore received in the following year, and you record the income in the 2023 EÜR.
• A supplier issues you an invoice in November 2022 which you settle in January 2023. Record this business expense in the 2023 EÜR.

For recurring payments at the turn of the year, the legislator provides for an economic allocation to the respective year if the payment is made between 22 December and 10 January. You pay your December rent on 8 January?

In that case, record the business expense in the preceding year! For investments, you begin depreciation in the year of first use. If, for example, you purchase a company car in November and pay for it in January, you start depreciating it in the November year.

As a general rule, you record all business expenses in the year in which you settled the invoice amounts — whether by cashless payment or in cash. Bear in mind, however, that income tax law provides depreciation rules for investments in assets. Low-value assets (geringwertige Wirtschaftsgüter) with net costs of up to 800 euros may be claimed immediately as a business expense; more expensive investments are depreciated over several years.

The precise depreciation periods can be found in the official depreciation schedules (AfA-Tabellen) — for a company car, for example, the depreciation period is six years. As a rule, depreciation is straight-line: you spread the acquisition cost evenly over the number of years.

The cash-basis income statement (EÜR) for freelancers is the basis for the tax calculation. It is therefore obvious that the tax authorities rely on a standardised method of profit calculation.

This ensures a uniform and therefore fair tax calculation. As a freelancer or trader entitled to prepare an EÜR, you must complete the EÜR annex (Anlage EÜR) when filing your tax return.

Over just a few pages you clearly set out all the key figures for your business income and business expenses. Before submitting your tax return, check which asset registers and depreciation schedules the tax office requires!

For each financial year you prepare a detailed record of your business income and business expenses. You also retain all receipts in case of a tax audit — you do not need to submit these documents.

In the EÜR you report the results of your bookkeeping in a compact form — you state, for example, your total income. Business expenses, on the other hand, must be broken down in part.

The following rules apply to the EÜR:

• Show net prices and VAT (output tax and input tax) separately. Also list items with different tax rates separately.
• Prepare a depreciation register for moveable and depreciable assets.
• Prepare an asset register for non-depreciable assets such as land.
• In the form, record expenses with limited deductibility in the appropriate lines. A typical example is the cost of a home office.
• Remember to keep a mileage log.

Many freelancers work exclusively on a cashless basis: they receive their invoice amounts by bank transfer or direct debit, and pay their own invoices via their bank account. Some freelancers, however, receive cash payments and settle expenses in the same

way: like all other items, this requires precise and traceable documentation. In practice this means recording all cash receipts and cash payments individually and in chronological order. Retain the relevant receipts! You are not required to keep a cash book, but it can make your work easier.

For a number of years now, the EÜR annex and all registers must be submitted electronically to your tax office. This is done via the ELSTER tax software. In cases of hardship, the tax authority may, on application, waive this requirement and issue a paper form instead. However, this applies only in rare exceptions.

When preparing the cash-basis income statement (EÜR) for freelancers, certain questions arise — for example in the areas of depreciation and expenses with limited deductibility. It can also be worthwhile to plan investments in advance with an eye to their tax implications.

Your Guhr Steuerberatung will show you all the options, explain the tax effects, and take care of preparing the EÜR for the tax office on your behalf!

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