Tax & Legal

In a recent judgment, the Supreme Tax Court held that the loss offset restrictions of Section 15b of the Income Tax Act would come into effect if the investor did not actively participate in the project. This also applies if the initiator of a tax deferral model, as a founding partner, participates on the same terms as the other investors.

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 Supreme Tax Court has held that a loss incurred on an investment project of a closed-circle investment fund can be deducted by investors from their other income if the loss was not pre-planned and factored into the fund’s yield calculations.