Prerequisites for tax relief (tariff reductions) for timber usage due to force majeure (calamity usage)
Timber utilisation due to force majeure (calamity utilisation) is utilisation caused by ice, snow, wind breakage or beetle damage or another natural event which is equivalent in its consequences to the events mentioned (§ 34b, para. 1, no. 2 EStG). Calamity does not include damage that regularly occurs in forestry, such as individual scrawny trees, damage caused by lightning, individual windthrow or beetle damage, insofar as they are within the scope of regular losses (R 34b.2, para. 4 EStR).
The reduced tax rates of § 34b EStG are applicable to income from calamity uses under the following conditions:
Requirement for half of the average tax rate:
- Damage due to force majeure must be reported to the competent tax authority (in Baden-Württemberg the
Oberfinanzdirektion Karlsruhe) and be quantitatively proven after processing (§ 34b para. 4 no. 2 EStG).
- The sold or taken timber must be proven separately for ordinary and extraordinary timber uses in the business year (§ 34b para. 4 no. 1 EStG).
Additional requirement for a quarter of the average tax rate:
- A rate of use must have been calculated in an operating work or operating report and determined by the tax authority (§ 68 EStDV). For reasons of simplification, a flat rate of use of 5 solid cubic metres of harvest per hectare applies to holdings with up to and including 50 hectares of forestry land, if an officially recognised farm report or farm work is not already available for other reasons. (R 34b.6 para. 3 EStR).
- Extraordinary timber utilisation without consideration of normal utilisation must exceed the utilisation rate (§ 34b para. 3 no. 2 EStG), whereby the one quarter tax rate only applies to the exceeding part.
How can I claim calamity uses for tax purposes ?
I. Calamity use (except red rot)
- Notification of the damage using form ESt 34b-Mitteilung (advance notification)
Calamity use must be notified immediately after the damage has been ascertained to the
Oberfinanzdirektion Karlsruhenotification. The form ESt 34b-Mitteilung (preliminary notification) must be used for the notification.
The estimated amount of damage must be stated for each individual forest location. The notification of the damage must be made in good time before the damaged timber is processed, so that a possible inspection of the damage by the forestry expert of the tax administration can take place. In urgent cases (e.g. bark beetle infestation), notification by telephone is also possible in order to be able to start processing immediately. The written notification must be submitted immediately. Damaged timber that has already been processed prior to registration cannot be recognised as calamity use. If, during the processing of the damage, it turns out that the estimated damage quantities stated are considerably exceeded, the notification must be corrected immediately by means of a subsequent notification.
- Proof of damage using form ESt 34b-Nachweis (final notification) Calamity uses must be notified immediately after knowledge of the actual amount of damage to the
Oberfinanzdirektion Karlsruhewith the form "ESt 34b-Nachweis (Abschlussmeldung)".
II. calamity follow-up cuts
The remains of stands left standing after calamities, which have to be felled for forestry reasons (so-called successive calamity felling), are only taken into account as timber utilisation as a result of force majeure if they cannot be included in the planned utilisation of the following years, but in particular if stands which are not ready for felling have to be felled (ruling of the Federal Fiscal Court of 11 April 1961, Federal Tax Gazette 1961 III page 276 ff).
It is imperative that the application for a subsequent cut due to calamity be submitted prior to processing and that it be discussed with the responsible forestry expert of Oberfinanzdirektion. Whether the felling is necessary for forestry purposes can only be judged on the standing stock. As a rule, felling may only commence after on-site inspection by the forestry expert of Oberfinanzdirektion. Remnants of stands which cannot be inspected due to late notification cannot be recognised as timber harvesting due to force majeure. As in the case of calamity utilization, the proof of calamity follow-up cuts must be made immediately after knowledge of the actual amount of damage.
III. red rot damage
Red rot can only be recognized as timber utilization within the meaning of § 34b, Subsection 1, No. 2, EStG (calamity utilization) if the following provisions apply:
- If the number of spruce trunks affected with red rot in a stand does not exceed 50 per cent of the total felled spruce trunks at a place of felling, this proportion of red rot is to be regarded as regular and therefore not as calamity.
- If the number of spruce logs infected with red rot at the time of thinning or clear felling of a stand exceeds 50 per cent of the total number of spruce logs felled, that part of the total quantity of spruce felled which corresponds to the percentage of red rot logs exceeding 50 per cent shall be recognised as calamity.
- A spruce log is considered to be red-rotted if more than 15 per cent of its diameter at the base of the log is damaged by fungal attack.
- In the case of mixed stands, the percentage and the proportionate amount of wood within the meaning of numbers 1 to 3 shall be based only on the spruce wood proportion.
The proof must be provided immediately after knowledge of the actual amount of damage.