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.
The free movement of capital under Article 63 of the Treaty on the Functioning of the European Union is not violated if the tax treatment of a donation to a foundation based in the Swiss Confederation is subject to national requirements that apply in the Member State of the donor. According to the Supreme Tax Court, the national legislature is not obliged to recognize the charitable status under foreign law.
The recognition of a foreign foundation as a charitable foundation is based solely on German law. In its ruling, the Supreme Tax Court further states that the German legislator is not obliged under EU law to recognize a non-profit status established under foreign law.
