Tax & Legal

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Tax & Legal

Profit participation rights at fixed rate is interest under German-Austrian tax treaty

In a dispute between Germany and Austria on the right of taxation of payments from registered certificates the ECJ held that such interest should be taxed only in the country of residence of the beneficial owner unless such debt-claims explicitly provide the creditor with a participation in the debtor’s profits. Continue reading

Forfeiture of Loss relief: further referral to Constitutional Court.

On 29 August 2017, the Hamburg Tax Court referred a question to the Constitutional Court on the constitutionality of the rules on the full forfeiture of loss relief under Section 8c 2nd Sentence of the Corporation Tax Act “CTA” (as amended by the Business Tax Reform Act of 2008 -now Section 8c (1) 2nd Sentence CTA ). The referring court is convinced that the rule is unconstitutional. Continue reading

No pro-rata reduction of tax-free allowance for non-resident beneficiaries

The ECJ has previously held that the German inheritance and gift tax option according to which a higher exempt amount is available where one beneficiary is resident does not fully resolve the conflict with EU law arising from the lower personal allowances for non-residents. In consequence and considering the relevant ECJ case law the Supreme Tax Court ruled in favour of a Swiss-resident widow and granted the full higher tax-free allowance for spouses of €500,000 irrespective of the total inheritance transferred which also included foreign property not subject to German tax. Continue reading

German exclusion from withholding tax relief in conflict with EU law?

The German anti- treaty shopping rule denying full or partial relief from withholding tax, as otherwise prescribed under a double tax treaty or applicable EU directive, is questioned by the Lower Tax Court of Cologne as being in violation of community law. The question has been referred to the ECJ in number of cases. Continue reading

Disallowance of discount on delivery of pharmaceuticals in breach of EU VAT law?

An ECJ advocate general has suggested that the court should rule that price rebates granted by manufacturing pharmaceutical companies on deliveries of pharmaceutical products to public health insurances and private health insurances must be treated equally for VAT purposes insofar as they both reduce the taxable basis for VAT. Continue reading

Country-by-Country Reports: German Ministry of Finance releases circular.

On 20 December 2016 legislation was passed introducing measures to combat base erosion and profit shifting. A part of this legislation – introduced in the new Section 138a of the General Tax Code – imposed an obligation on multinational enterprises to report annually for each tax jurisdiction in which they do business, so-called Country-by-Country (CbC) reports. On 11 July 2017 the German Ministry of Finance released a circular, which provides some guidelines on the completion of the CbC reports. Continue reading

Refusal to deduct French social security contributions not compatible with EU law

The German refusal of a deduction for social security contributions paid by a German resident French government official does not meet the EU-requirement for free movement of workers, since its effective exclusion under German law placed her at a comparative disadvantage vis-à-vis her German colleague. Continue reading

VAT grouping and input VAT deduction for holding companies

Following decisions of the European Court of Justice and the German Supreme Tax Court the Federal Finance Ministry has issued guidelines on the VAT grouping and the input VAT deduction for holding companies. In a special VAT Newsflash our tax experts take a closer look on the situation as a whole. Continue reading