An external data protection officer is a commercial entrepreneur, even if he also works as a lawyer. As the Federal Fiscal Court (Bundesfinanzhof, BFH) decided in its ruling of January 14, 2020 (VIII R 27/17), there is no freelance activity within the meaning of § 18 para. 1 EStG exists. The external data protection officer is therefore subject to trade tax and – if certain profit limits are exceeded – also subject to accounting.
In the case in question, the plaintiff worked as an independent lawyer in the field of IT law. In addition, he worked for various larger companies as an external data protection officer. The tax office regarded this activity as commercial. It assessed trade tax and claimed that the plaintiff was a commercial entrepreneur pursuant to sec. § Section 141 of the German Fiscal Code (AO) to keep books and prepare financial statements as of the following year. The plaintiff’s appeal against this 2012 request was unsuccessful, as was the subsequent action before the Tax Court.
The BFH has now confirmed the previous decision. As a data protection officer, the plaintiff does not exercise an activity reserved for the profession of a lawyer. Rather, he is engaged in an independent profession that must be distinguished from his work as a lawyer. The data protection officer advises in interdisciplinary areas of knowledge. In addition to data protection expertise, he must also have specialist knowledge in other areas (e.g. information and communications technology and business administration). However, unlike the lawyer, he does not have to provide evidence of specific academic training.
For this reason, the plaintiff as data protection officer is also not active in a profession similar to that of a lawyer. Finally – according to the BFH – no other self-employed work within the meaning of § 18 para. 1 No. 3 EStG to be assumed. There was a lack of the necessary comparability with the standard examples mentioned there.