Section 20 (4a) sentence 3 of the Income Tax Act (ITA) provides that certain capital-related measures are initially treated as tax neutral. Taxation only occurs at the time of resale of the securities which were delivered in the course of the capital transaction. In a recent judgment, the Supreme Tax Court decided that this does not apply to cases in which neither the issuer nor the holder has the right under the contractual terms to unilaterally tender securities or demand the delivery of securities instead of repayment of the securities in cash.
Section 15b Income Tax Act dealing with the restriction of loss utilization for tax deferral models does not presuppose that an investment is not economically sensible or has not proved particularly successful. The restriction for an offset and deduction of losses from tax deferral models is also constitutional in the case of a so-called definitive loss. This was currently decided by the Supreme Tax Court who hereby confirmed its previous case law on this matter.
The Regional Tax Court of Muenster held that a loss from the exchange of profit participation rights for shares in a registered cooperative ("eG") and bonds may be set off against income from capital investments. Thus, the tax office's attempt to regard the loss as belonging to the non-taxable private asset portfolio of the plaintiff failed.
The Supreme Tax Court has held that a tax office cannot be required to issue a provisional assessment restricting the immediate deduction of the loss brought forward, merely because of the possibility that the remaining loss to be carried forward might be invalidated by a share transaction abroad at some future point in time.
The Supreme Tax Court has referred to the Constitutional Court on whether a confiscatory effect of the loss offset deferral provisions can be a breach of the equal treatment requirement of the constitution.
The Supreme Court has held that the initial full loss offset on €1 m applies to each period of assessment, rather than to each calendar year. Thus it can only be claimed once for a multi-year assessment.
The Supreme Tax Court has held that the 1999 introduction of “minimum taxation” rules limiting loss offset by income type do not apply to a 1999 loss carried back to 1998.
