BFH: crime losses deductible only on proven business link

Losses from crime can be business expenses — but only if the business link is proven beyond doubt.Bundesfinanzhof In a judgment of 28 January 2026 (X R 21/23, ECLI:DE:BFH:2026:U.280126.XR21.23.0), the Bundesfinanzhof (BFH) X. Senat set the test for deducting losses caused by criminal acts as Betriebsausgaben under § 4 Absatz 4 Einkommensteuergesetz (EStG) and sent a family-fraud dispute back to the Sächsisches Finanzgericht for a fresh overall assessmentBundesfinanzhof.

The case concerns a sole trader running a security business who claimed payments of 380,000 EUR for 2008 and 205,000 EUR for 2009, evidenced by invoices from a Vienna company that its manager later called sham invoices procured by the claimant's brother. The Finanzamt disallowed the amounts; the Finanzgericht dismissed the claim for lack of a proven contractual obligation and rejected deduction as employee-fraud losses.

The BFH vacated that judgment and remanded.Bundesfinanzhof The court's Leitsätze hold, first, that for losses caused by criminal offences it must be objectively beyond doubt that the triggering event (auslösendes Moment) for the outflow of value lay in the business sphere and not the private sphereBundesfinanzhof. Second, the mere fact that a relative caused the loss does not necessarily exclude a business connectionBundesfinanzhof — but the objective, factual or economic link with the business then needs particularly careful examination to separate it from non-deductible private living costs under § 12 Nummer 1 Satz 2 EStG.

Deduction does not always require a proven performance in return: payments made expecting the contractual result can qualify if objectively capable of promoting the business, and involuntary outflows (Zwangsaufwendungen) can also be business expenses. Theft, embezzlement or breach-of-trust losses are deductible where the damaging event stems from the business sphere — for example cash theft by staff, regardless of whether the funds were business or private assets — or where the money was earmarked for future business use, which must be objectively traceableBundesfinanzhof, for instance through closed cash management or a counted sum set aside to settle a business liability.

Where relatives are involved, business and private motives are typically intertwined, so the court must weigh all private and business factors together. The decisive question is not whether the perpetrator was a relative but whether an unrelated employee could have caused the same damage under the same conditions — considering any internal control system, industry practice for cash payments, and whether the trust rested purely on the family bond or on circumstances conceivable outside kinship. The victim's own negligence, even gross carelessness, does not block deduction under § 40 Abgabenordnung (AO); only misconduct overlaying the business inducement as a private motive doesBundesfinanzhof.

The lower court's reasoning failed that test. It had assumed without an experience-based rule that such trust is extended only to close relatives, never examined whether an unrelated employee could have caused the same loss — the claimant's still-employed staff member was available as a witness — and treated the alleged cash handovers as established without addressing the claimant's credibility, including the unusual 2009 sequence of borrowing 180,000 EUR from the brother only to hand the same money straight back. The burden of proof for the business character, including industry cash practice, stays with the taxpayer, and doubts count against him. The senate also flagged the scale — a fifth of 2008 and a sixth of 2009 expenses —.

Legal basis: § 4 Absatz 4 and § 12 Nummer 1 Satz 2 EStG, § 40, § 90 and § 162 Absatz 2 Satz 2 AO; BFH judgment X R 21/23 of 28 January 2026, vacating Sächsisches Finanzgericht 2 K 772/14 of 15 December 2021 and remanding.