German corporate group law is characterized by the principle of the legal independence of group companies. Nevertheless, the question repeatedly arises as to what extent the parent company is liable for tortious breaches of duty by its subsidiaries. This question has significant practical implications for corporate group organization and risk management. The following article provides an overview of the corporate law foundations, the grounds for the parent company’s liability, and its limitations.
The European Commission has approved State aid schemes to provide temporary electricity price relief for energy-intensive companies in Bulgaria, Germany and Slovenia in line with the objectives of the Clean Industrial Deal.
In a recently published judgment, the Supreme Tax Court decided that the restrictions to offset losses for limited partners are not in breach of constitutional law. The temporal restrictions of Section 15a (1) Income Tax Act are not significant in such a way that they would make the application of the new regulation appear unreasonable, especially since the taxpayer is free to decide for himself whether, when, and to what extent he makes a contribution.
In a most recent judgment following a Polish request for a preliminary ruling, the General Court of the EU confirmed the incompatibility of the local input VAT regulations with EU Law and held that the right to deduct input VAT arises with the supply and the chargeability of the tax, and must not depend on the immediate possession of an invoice provided that the taxable person did receive the invoice before submitting the VAT return. Any national “forced deferral” violates the principle of fiscal neutrality.
In a recently published judgment, the Supreme Tax Court held that the profit from the sale of the share in a project company in the legal form of a partnership (GmbH & Co. KG) is not included in the trading income of the plaintiff, a limited liability company (GmbH), because the conditions for trade tax liability - namely, the operation of a business as defined in Section 2 (1) Sentence 1 of the Trade Tax Act - were not (yet) met.
The Supreme Tax Court had to determine the place of supply of advertising services for the purpose of input VAT deduction by a company based abroad that has a permanent establishment in Germany. The starting point was the question whether the services were provided for and used by the latter. This was answered by the Supreme Tax Court in the negative.
In a most recently published judgment, the Supreme Tax Court decided that exit taxation - a process in which hidden reserves of assets (built-in gains) are identified and taxed because otherwise Germany would lose its right of taxation - can, in principle, also occur through a mere change in the law (so called „passive“ exit taxation).
In a recent judgment, the Supreme Tax Court laid down the criteria for a reversal of a purchase transaction to be recognized from a tax point of view. The decisive factor is whether the original acquisition is in fact completely reversed. If several purchasers have purchased a property as co-owners the withdrawal of just one purchaser from the sales contract cannot effectively eliminate their joint claim to transfer of ownership of the property.
In a recently published decision, the Supreme Tax Court had to determine whether, and under what conditions, the acquisition of a share in a partnership is subject to real estate transfer tax if the interest is held under a trust arrangement and the share is later transferred from the trustee to the trustor.
The European Court of Justice must currently review an Italian regulation that prevents certain companies from benefiting from a more favorable rule regarding the deductibility of interest expenses in the case of a cross-border group taxation scheme solely because their common parent company is resident in another Member State. Advocate General Juliane Kokott presented her Opinion on the matter and suggests the court decide that such national legislation is not hindered by the freedom of establishment under Articles 49 and 54 TFEU.
Donations and membership fees to recognized political parties will get more tax breaks in the future. Anyone who donates 3,300 euros can reduce their taxes by 1,650 euros a year—regardless of their personal tax rate, explains an executive director of the Federal Payroll Tax Support Association (Lohnsteuerhilfeverein) in Berlin.
On 18 March 2026, the highest state tax authorities issued a general order rejecting all admissible objections against the statutory actuarial interest rate of 6 percent used in the calculation of the partial (going-concern) value of pension provisions and which are pending as of that date.
Churches themselves determine who is a member of the church within the limits of the constitution. The Supreme Tax Court overturned the assessment of Protestant church tax because the tax court of first instance had not sufficiently examined the issue of re-admission.
Unlocking the full potential of the Single Market for Europe's entrepreneurs: On 18 March 2026 the European Commission presented its proposal for EU Inc., which is an optional, digital-by-default European corporate framework. It will make it easier for businesses to start, operate and grow across the EU – incentivizing them to stay in Europe, and encourage those who once looked elsewhere to return.
On 26 March 2026 the Council and the Parliament agreed to overhaul the EU customs framework, giving the Union a more modern toolbox to deal with trends such as huge increases in trade volumes, especially in e-commerce, a fast-growing number of EU standards that must be checked at the border and challenging geopolitical realities.
The retroactive application of Section 13b (10) Inheritance and Gift Tax Act to gifts made prior to the publication of the revised version of the law on 9 November 2016 does not raise any constitutional doubts according to a most recently published judgment of the Supreme Tax Court.
In a recent decision, the Supreme Tax Court established legal certainty for parents who, as part of an anticipated succession plan, agree with their children during their lifetime on a waiver of the statutory share of the inheritance in exchange for a lump-sum payment. The judges at the highest tax court made it clear that such lump-sum payments, even if paid in installments, are not subject to tax as capital investment income or other income.
The mandatory restriction of the use of assets (dedication of assets) of a charitable institution is fulfilled if the statutes either specify the tax-privileged purpose in detail or sufficiently designate another tax-privileged corporation or legal entity under public law to which the assets are to be transferred for tax-privileged purposes after the dissolution or termination of the corporation or if its previous purpose has ceased to exist. This was decided by the Supreme Tax Court in a recently published judgment.
In a recently published judgment, the Supreme Tax Court clarified that, in the context of a silent partnership in a limited liability company, even a high degree of co-entrepreneurial initiative cannot establish the full status of a co-entrepreneur without at least a minimal co- entrepreneurial risk.
