Tax & Legal

In a recently published decision, the Supreme Tax Court clarified that foundations with legal capacity are not subject to trade tax per se. The decisive factor is whether economic business operations within the meaning of the Trade Tax Act are carried out.

As a result of a decision published by the Supreme Tax Court in April 2025, the Federal Ministry of Finance (MoF) has commented on the distinction between the remuneration of a service on the one hand and economic activity on the other in case of deficit-ridden institutions.

The European Court of Justice decided that a holding company with taxable output services to its subsidiaries is not entitled to deduct input tax if the input services received are not directly and immediately related to the holding company's own sales, but rather to the largely tax-exempt activities of the subsidiaries.

The Supreme Tax Court has asked the European Court of Justice (ECJ) for a preliminary ruling on the input tax deduction of a functional (operating) holding company from certain input costs.

The Supreme Tax Court has held that the sale of an investment in a company is a non-business related activity and furthermore VAT-free as a sale of shares. The right to deduct the related input tax depends on the costs being not linked only to the sale.