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.
Tax & Legal
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.
On 25 January 2017 the German government published a draft bill proposing a restriction of tax relief on royalty payments made to related parties from 2018 onwards.
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)
VAT claims may also be asserted in insolvency proceedings against a GmbH, if the GmbH, which had previously been treated as a controlled company in a fiscal unity (Organschaft), which was subsequently not deemed to exist, actually received the VAT owed by it from the assumed controlling company (Organträger). According to the Federal Tax Court, no protection of legal expectations may be claimed in this situation despite a change in the application of the law on the Organschaft through a decision of the Supreme Tax Court in the interim.
Tax authorities register a VAT claim in the insolvency table
The new law dealing with relief scenarios to allow for a continued utilization of losses, i. e. in cases where the business operation does not change, is now under way and will be finally dealt with by the Bundesrat before year end.
In this issue: PwC Reports, Official ponouncements, Supreme Tax Court Cases and From Europe
The Finance Ministry has decreed on a Supreme Tax Court judgment regarding securities lending schemes and provides some guidance as to when a transfer of economic ownership of the securities takes place.
The Federal Ministry of Finance has published its draft bill to combat tax avoidance and to amend further tax provisions. Through this draft bill, the prime goal of the Federal Government is to make it more difficult for domestic taxpayers to avoid tax through the use of an offshore company. In addition to increasing the taxpayer’s obligations to cooperate, the new draft also proposes an end to bank secrecy in tax matters. The cabinet will probably give its approval to the draft bill on 21 December 2016.