The Supreme Tax Court decided that rental agreements between spouses are not generally considered as “fictitious transactions” even if the rental payments are returned to the business via intra-family money accounts (cycles).
In identical decrees issued by the Supreme Tax Authorities of the Federal States, the tax authorities comment upon the judgment of the Supreme Tax Court of 26 July 2022 (II R 25/20) and upon the underlying view that the option relief under Section 13a (10) Inheritance Tax and Gift Tax Act (or Section 13a (8) IHTA old version) can be exercised separately for each economic unit transferred. This applies to all open cases.
The ECJ has held that a non-resident taxpayer must be able to deduct an annuity paid in consideration for a business interest on the same lines as a resident.
The Constitutional Court has held the exemption of business assets from inheritance and gift tax to be unconstitutional as it is too broad-based. However, the present rules continue in force for a temporary period.
An ECJ advocate general has suggested the court hold for a second time that Germany must allow a non-resident a deduction on the same terms as a resident for a pension paid to his father in consideration of his early assumption of joint ownership in the family business.
