Tax & Legal

    Tax & Legal

    Loan interest subject to profits: Interest or profit sharing under Austrian treaty?

    In a dispute between Germany and Austria on the right of taxation of payments from registered certificates an ECJ advocate general has suggested 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.

    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 now been referred to the ECJ.

    Foreign Tax Act: Income adjustment in violation of community law?

    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.

    Higher tax-free allowance also for non-resident beneficiaries

    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.