Tax & Legal

In a recent decision the Second Senate of the Federal Constitutional Court discontinued proceedings arising from two referrals by the Supreme Court under Article 100(1) of the Constitution in relation to flat rate payroll tax on withdrawals from pay-as-you-go supplementary pension schemes.

The Supreme Tax Court decided that an action for annulment which merely asserts a breach of the obligation to refer the matter to the European Court of Justice (ECJ) is not admissible. This will - as a result - simplify the route to the Constitutional Court. Taxpayers who are of the opinion that the Supreme Tax Court was wrong not to refer their case to the ECJ for a preliminary ruling on a question of Union law can henceforth appeal directly to the Constitutional Court without first submitting a complaint for that matter to the Supreme Tax Court.

The Constitutional Court has held the treaty override provisions of the Income Tax Act making treaty exemption dependent upon proof of taxation or explicit exemption in the other state do not breach the formal provisions of the constitution if they took effect after enactment of the treaty.