Neither the Arbitration Agreement nor the resulting mutual agreement procedures provide an independent legal basis for a reduction of corporate income. According to the Supreme Tax Court in its recent decision, an agreed reduction in profits must be feasible to implement under national tax law. The specific subject matter in dispute was the non-deductibility of 5% of the tax-exempt income pursuant to Section 8b(5) of the Corporate Income Tax Act.
In a recently published decision, the Supreme Tax Court held that a full-time shareholder-managing director who was employed by a GmbH at the time of his death is to be counted as an employee when determining the preferential tax treatment under Section 13a(1) of the Inheritance and Gift Tax Act. Part-time employees must also be counted as employees on a per capita basis.
Litigation costs are deductible as extraordinary personal expenses if they are unavoidable for the taxpayer. According to a recent decision of the Supreme Tax Court, this is generally not the case for litigation costs associated with the acceptance of an inheritance or a gift.
In a recently published decision, the Supreme Tax Court addressed the conditions under which the expiration of the assessment period (statute of limitations) is suspended due to inquiries by the tax investigation department.
The case before the Supreme Tax Court involved the question of whether and in what circumstances subsequent production costs for land were incurred. In its recent judgement, the Supreme Tax Court held that expenses to remove mining damage from a property may be treated as immediately deductible income-related expenses.
When a foundation inherits shares from a contributor and sells them within the seven-year lock-up period, the resulting contribution gain I (“Einbringungsgewinn I”) is attributed retrospectively to the contributor. The foundation must pay the tax as the contributor’s universal successor. Section 22(6) of the Reorganisations Taxes Act 2006 (RTA) does not govern the personal attribution of that gain: its scope must be narrowed to reflect the provision’s purpose ( so-called teleological reduction)
In a recently published judgment, the Supreme Tax Court decided that a pilot’s primary place of work also includes an aircraft parked at its home airport. Until the aircraft leaves its parking position it is considered part of the airport grounds. Refueling and safety checks in the cockpit are therefore activities performed at the primary place of work.
Section 32a(1) Sentence 1 of the Corporation Tax Act, as a provision amending the rules on hidden profit distributions, also permits the corresponding recognition of hidden contributions indirectly connected with the hidden profit distribution as subsequent acquisition costs for a participation in another corporation, the Supreme Tax Court said in a recent decision.
In a recently published decision, the Supreme Tax Court took the opportunity to clarify and further develop the established principles regarding financial integration as a requirement for the existence of a VAT group within the meaning of Section 2( 2) Number 2 of the German Value-Added Tax Act.
In a recent judgment, the Supreme Tax Court held that, regarding the tax exemption for certain corporate group reorganizations under Section 6a of the Real Estate Transfer Tax Act and following a split-up in accordance with the Reorganization Act, a stake held by the split-off company in a subsidiary of the acquiring company for more than five years must be attributed to the acquiring company as partial universal successor if the shareholding in the subsidiary was the subject matter of the relevant acquisition agreement.
For an insolvent debtor, the insolvency administrator’s fees may be deductible as current or subsequent business expenses, provided the insolvency administrator’s management activities help to satisfy the insolvent debtor’s business liabilities. With this recently published decision, the Supreme Tax Court has clarified, in principle, an issue of great practical importance in cases of insolvency proceedings.
In a recent judgment, the Supreme Tax Court decided that the statutory interest levied on late payment or refund of value added tax amounts pursuant to Section 233a of the General Tax Code does not contravene EU law.
According to the Supreme Tax Court (I R 20/23) in a recently published decision, a pre-constituted dependent family foundation (“vorkonstitutionelle unselbständige Familienstiftung”) administered by a local authority qualifies as a private-law foundation without legal capacity under Section 1(1)(5) of the Corporation Tax Act, even if its approved statutes designate it as a public-law foundation. Its legal character depends on the overall circumstances—particularly its purpose and organisational structure—rather than on the wording of its statutes alone. Because the foundation primarily served private family interests and was not integrated into the state administration, it was subject to unlimited corporate income tax liability.
If a valuation report is prepared for an inherited property and if that same property is then sold a few months later for a purchase price significantly higher than the value determined in the appraisal, the Supreme Tax Court clarified that neither the appraisal nor the purchase price takes precedence from the outset. However, under certain conditions a properly prepared value appraisal may be suitable as evidence of the lower fair market value.
Certain care facilities are exempt from trade tax if, in at least 40 percent of cases, the costs of care are covered in full or for the most part by statutory social insurance or social welfare providers. According to a decision of the Supreme Tax Court, this also applies if the services are billed through a third party.
In three judgments, the Supreme Tax Court held that breakfast services provided to hotel guests, as well as access to fitness and wellness facilities, are not subject to the reduced tax VAT rate under Section 12 (2) Number 11 of the Value-Added Tax Act, and that this does not contravene EU law.
In a recent judgment, the Supreme Tax Court confirmed that, when determining whether the profit threshold for claiming the investment deduction allowance has been exceeded, off-balance-sheet adjustments must also be taken into account, including trade tax, which must be added as a non-deductible business expense pursuant to Section 4(5b) of the Income Tax Act .
In a most recently published decision, the Supreme Tax Court commented on the distinction – from a VAT point of view - between brokerage services and own-account transactions on online booking platforms: If an intermediary company clearly presents itself to the consumer as a broker, it cannot be legally be the provider of the core service unless it has actually rented the vehicle itself first, the Supreme Tax Court said.
In a recent judgment, the Supreme Tax Court held that the plaintiff, as a self-employed marine and harbor pilot, does not maintain a permanent establishment within the meaning of Section 4 (5) Sentence 1 No. 6 of the Income Tax Act. Therefore, the deduction of business expenses for travel costs is not limited to the mileage allowance.
In a most recently published judgment, the Supreme Tax Court held that a self-employed person is considered to maintain two households only if he or she maintains a separate household outside the location where he or she primarily carries out his or her business activities and also resides at the location where he or she primarily carries out those activities. In any case, the primary focus of the entire business activity of a self-employed person is at the place where he or she pursues the sole business (permanent establishment) in the context of Section 4 (5) Sentence 1 No. 6 Income Tax Act.
