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.
Donations to a foundation with legal capacity established by a federal state are not exempt from gift tax if, according to the purposes specified in the statutes of the foundation, the donations do not exclusively serve the purposes of the federal state and are not exclusively used for tax-privileged purposes. This is the conclusion reached by the Supreme Tax Court in a recently published decision.
Following an earlier decision of the Supreme Tax Court from 2024 on the VAT treatment of the administration (management) of fiduciary foundations, the Federal Ministry of Finance (MoF) has commented on the matter and amended Section 1.1 of the VAT Application Ordinance accordingly.
An ancient english university college may meet the requirements of a charitable foundation under German law and be exempt from corporate income tax because of its non-profit status. In its decision the Supreme Tax Court also found that the legal structure of the college is equivalent to that of a German foundation within the meaning of Sec. 80 (1) of the German Civil Code.
