Under certain conditions, changes in shareholders and the admission of new investors will in future be possible without giving rise to a forfeiture of losses carried-forward. On 23 December 2016 the Act for the Further Development of Tax Loss Utilisation for Corporations was published after having been adopted by the German Parliament (Bundestag and Bundesrat) on 20 December 2016.
Where an entrepreneur undertakes to enter into a tenancy (landlord and tenant) for a consideration, the supply is tax exempt according to Section 4 No. 8 (g) VAT Act.
The procurement and assumption of liabilities, sureties and guarantees as well as the administration of securities by the creditor are VAT exempt according to applicable EU law. This exemption has its derivation in financial services (cf. the ECJ decision Velvet & Steel Immobilien from 19 April 2007 – C-455/05).
There is no addback for trade tax purposes for amounts paid by a German company arranging for participation in foreign trade fairs on behalf of others.
The right to deduct input VAT may be excluded only in cases in which the goods acquired are used, to an extent greater than 90%, for purposes other than the taxable person’s business, and not where the goods are used for non-economic purposes (such as: in the course of public activities).
Tax depreciation for wind turbines presupposes economic ownership of the asset. A change in economic ownership requires that any risks are transferred to the purchaser/customer.
On December 22, 2016 the finance ministry has finally published its detailed administrative principles on the allocation of profits between a business and its foreign branches.
The Supreme Tax Court has now finally ruled that the German inheritance tax privilege relieving repeated transfers within the same family should not be extended to previous transfers taxable in another member state.
On 21 December the German government adopted a bill to combat tax avoidance and to change certain other tax provisions. The Government’s main intention is to make it more difficult for German taxpayers to avoid tax by using letter-box companies. In addition to numerous provisions imposing obligations on the taxpayer to co-operate with the tax authorities, the bill abolishes the bank secrecy rules.
The aim of the new bill is to enable the tax authorities to obtain detailed information about business relationships between German taxpayers and letter-box firms in tax havens and to that end to provide the tax authorities with new investigatory powers.
On 20 December 2016 the German government published a draft bill proposing a restriction of tax relief on royalty payments made to related parties from 2018 onwards.
According to the proposal, the deduction of expenses for royalty payments made to related parties is to be restricted, where:
- the corresponding royalty income is subject to a preferential tax treatment (for example patent box or other IP regimes), in the hands of the related party; and
- the effective taxation of the royalty income is below 25%.
If these two foregoing conditions are met, relief will not be available to the extent the effective tax rate is below 25%.
In its last session of the year, the Federal Assembly (Bundesrat) gave its assent today to the Act to Implement the Amendments to the EU Mutual Assistance Directive and to Introduce Further Measures to Combat Profit Reduction and Profit Shifting
This packet of measures, which will come into effect on 1 January 2017, will give almost € 25 billion worth of relief to taxpayers. In particular low earners, families and lone parents will benefit.
The Bundesrat also gave its assent to the law amending the rules regarding the utilisation of losses upon change of control. (See our Blog: http://blogs.pwc.de/german-tax-and-legal-news/2016/12/06/bundesrat-set-to-approve-draft-for-relief-from-curtailment-of-loss-utilization)