The subject-to-tax provision of the Parent-Subsidiary Directive, whereby distributed dividends are exempt from withholding tax, requires that the dividends are taxed in the hands of the parent company. In practice, this necessitates actual payment of the tax.
Tax & Legal
The ECJ held that an exempt intra-community supply should not be taxable merely because of a missing VAT registration No. where there is no suggestion of evasion and the other conditions for exemption are fulfilled.
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 now been referred to the ECJ.
The ECJ held that the sale of blood plasma for the manufacture of medicines does not fall under the VAT exemption applicable to supplies of human blood. As a result a deduction of the underlying input VAT relating to the supply of plasma is available.
The ECJ held that the correction of formal invoicing errors is allowable with retroactive effect on the input tax deduction.
The Lower Tax Court of Rhineland Palatinate held that the income adjustment provision of the Foreign Tax Act as amended in 2003 might not be in accordance with EU-law and has referred the case to the ECJ for further clarification. The focus of the judicial review is on the tax consequences of a business relationship with a related party and where the terms do not meet the third party comparison test.
The ECJ held that the German inheritance and gift tax option for taxation as a resident does not fully resolve the conflict with EU law from the lower personal allowances for non-residents. In consequence and considering an earlier ECJ judgment of April, 2010 the referring Lower Tax Court now finally ruled in favour of the taxpayer.
The EU Commission has published guidance when or whether public spending falls within, and outside, the scope of EU State aid control. This guidance will help public authorities and companies to identify when public support measures can be granted without needing approval under EU State aid rules.
The ECJ has held that an obligation on a German bank to report assets held by German customers of its Austrian branch to the German tax authorities does not restrict the bank’s freedom to establish itself in Austria.
An ECJ advocate general has suggested that a tax treaty can justify a hindrance on the free movement of capital from granting a tax credit privilege to recipients of a dividend from a third country but not to those with dividends from a member state.