The European Council has reached political agreement on the automatic exchange of information on tax rulings, including advance pricing agreements, with the tax authorities in all other member states from January 1, 2017. Rulings issued or amended in the previous five years will also be exchanged.
Tax & Legal
The Supreme Tax Court has held that the profit from the release of a provision no longer required arising from a foreign permanent establishment long after closure falls under the business profits clause of the relevant double tax treaty and is thus taxable in the foreign country.
An ECJ advocate general has suggested the court hold that the German insistence on tax consultancy businesses being led by individuals with German professional qualifications to be excessive in view of the legitimate interests of the state and of clients in the availability of accurate and appropriate professional advice.
The Supreme Tax Court has held that compensation for loss of office is taxable in the state of residence under the German/Swiss tax treaty and not in the state of employment. A mutual agreement between the two revenue authorities to the contrary is not to be applied for lack of an adequate legal basis.
In this issue: Official Pronouncements, Supreme Tax Court Cases, From Europe and From PwC.
The finance ministry has decreed that an employer may upgrade an employee’s car insurance to comprehensive cover for business travel without tax consequences for the individual.
The Supreme Tax Court has held that a write-off of an irrecoverable related-party loan is not subject to income adjustment under the arm’s length rules, although the interest rate should reflect the bad debt risk.
An ECJ advocate general has suggested that neither the German refusal to allow a deduction for branch losses incurred in other member states, nor the recapture provision in the event of disposal of the branch offend against community law.
The ECJ has held that provisions allowing full expense deduction within tax groups must be applied to otherwise eligible foreign subsidiaries.
The finance ministry has added a passage on asset leasing to its VAT Implementation Decree to the effect that entry by the leasing company into the transaction before delivery of the asset to the customer renders the lessor the purchaser, whereas entry afterwards qualifies the leasing transaction as VAT-free finance.