Tax & Legal News – Issue 4, October 2013

In this issue: PwC Reports, Official Pronouncments, Supreme Tax Court Cases, From Europe and From PwC.

PwC Reports

• Draft ordinance on permanent establishment profits

Official Pronouncements

• Subject to tax rules in treaties
• Withholding tax exemption on dividends on shares held in bank custody
• Maximum foreign tax credit to take account of personal allowances
• Automatic information exchange with Spain on pensions
• Provisions to be taken up by public-private partnerships under normal accounting principles
• Employee option in valuing staff purchases

Supreme Tax Court Cases

• Organschaft parent need not be active business until subsidiary’s first year end
• No provision for cost of meeting a future technical requirement
• Container accounting – provision for return of bottles
• Option premium not part of sale proceeds
• No return of capital contribution in the same year
• No correction in later years of tax auditor’s error
• Write-down on some foreign investments permitted for 2001
• Mobile phone discount is prepaid expense
• Related party by ownership despite restrictions on exercise of ownership rights
• Leasing fee for foreigners only taxable in so far as object used in Germany
• No trade tax add-back for foreign dividends in 2001
• Real estate transfer tax basis reduced if conveyancing costs borne by seller
• No RETT if indirect change in partnership incomplete
• Hidden distribution from foreign company is investment income in Germany
• Gain on sale of profit participating right acquired before 2009 tax-free
• Return of employee shares at fixed price leads to employment income
• Permission to use company car privately is taxable benefit, but no presumption that prohibition on private use will be ignored
• Chauffeur is taxable benefit for employee
• Three-month limit on subsistence allowance upheld
• Import value of DVDs includes estimated royalties payable by subsequent purchaser
• No allocation of input tax to intended tax-free turnover
• Liability for VAT in ceded debts cannot be avoided by contract
• No VAT on sale of bad debts
• Contractual agreement cannot limit a taxpayer’s duty to supply information

From Europe

• Exemption from loss cancellation on change of shareholders may constitute state aid
• Full inheritance tax exclusion for non-EU residents?

From PwC

• Breaking news

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