In a recent judgment, the Supreme Tax Court decided, inter alia, that interest on deposit liabilities in the retrocession business of a reinsurance company is subject to the trade tax addback pursuant to Section 8 no. 1 letter a Trade Tax Act. There is no general exception for insurance and reinsurance companies similar to the so-called trade tax banking privilege.
In a most recent judgment, the Supreme Tax Court decided that the trade tax addback of a silent partner's profit share is subject to the free movement of capital which also applies to third countries (here: the USA). The application of the "grandfather“ clause of Art 64 TFEU (ex-Article 57 TEC) is generally not affected by statements made in a letter from a lower tax authority.
The Supreme Tax Court has decided that the expenses incurred by a special outdoor advertising agency for the provision of advertising media by corresponding advertising media providers (out-of-home advertising) did not meet the requirements for trade tax add-back pursuant to Section 8 no. 1 letters f or d Trade Tax Act.
In a most recent decision, the Supreme Tax Court held that the rental of advertising mediums paid by a service company might be added back for trade tax purposes provided the assets were to be fixed assets had the company itself been the owner.
After the European Court of Justice had answered the preliminary request submitted by the Supreme Tax Court on the subject of trade tax addback of foreign portfolio dividends in the year 2001, the latter continued to suspend the appeal and now referred the matter to the Constitutional Court. It should be ascertained whether the transitionary regulation, which had been introduced with the replacement of the imputation system in 2001 with the half-charge to income tax, contravenes the principles of legitimate expectations laid down in Article 20 (3) of the Basic Law.
According to a ruling of the Supreme Tax Court the sole criterion for claiming the banking privilege for trade tax purposes is that the assets from banking transactions and the purchase of monetary receivables outweigh the assets from other business activities. With its decision the court thus keeps to the strict wording of the relevant statute.
The Supreme Tax Court decided that payments made by a provider of holiday lettings to the respective owners of the holiday homes in order to sublet them himself to travelers may qualify as rental within the meaning of Section 8 No. 1 letter a Trade Tax Act and must in part be added back to the trading profit subject to trade income tax.
In a most recent decision, the Supreme Tax Court held that payments for granting cable retransmission rights may be added back for trade tax purposes pursuant to Section 8 No. 1 (f) of the German Trade Tax Act.
The trade tax addback of foreign portfolio dividends in the year 2001 is in line with the EU provision on the free movement of capital in Article 63 TFEU (formerly: Article 56 TEC). This was decided by the European Court of Justice in an answer to a preliminary request submitted by the Supreme Tax Court.
The remuneration paid to managing directors for the management of a partnership limited by shares (KGaA) must be added back for trade tax purposes even where the KGaA concluded an employment contract directly with the managing directors who each are limited partners of a limited partnership (GmbH & Co. KG), which itself is the general partner of KGaA (the plaintiff). According to the Supreme Tax Court, such "third-party employment" does not reduce the amount of add-back when determining the KGaA's trading income if the KG is entitled to a corresponding claim for compensation by its articles of association.
The Supreme Tax Court decided that maintenance fees incurred under leasing agreements must also be added back to the income subject to trade income tax.
According to a decision of the Supreme Tax Court, the dividend income exemption for trade tax on qualifying shareholdings is also available for distributions of companies of foreign legal form with its statutory (registered) seat abroad, provided the foreign company is comparable to a German corporation, has its place of management in Germany and therefore maintains a permanent establishment there.
There is no addback for trade tax purposes for amounts paid by a German company for grounds used in exhibition halls of trade fairs. The costs for renting such a booth can only lead to an add-back if the exhibition ground would be part of the fixed assets of the exhibiting company and under the assumption that it was owned by the exhibiting company.
In a recently published decision, the German Supreme Tax Court held that land tax owed by the landlord but contractually passed on to the lessee is part of the rent and must therefore be added back in part to trading income subject to trade income tax.
Rental and lease payments for the use of movable fixed assets are not to be added back to trading profits in accordance with Section 8 No. 1 Letter d Trade Tax Act (TTA), insofar as they are to be attributed to the costs for the production/manufacture of current assets.
The German Federal Cabinet has released the draft bill on the crisis management package aimed at mitigating the economic impact of the COVID 19 pandemic.
According to a decision of the Supreme Tax Court, the leasing instalments paid in cases of refinancing by a leasing company were also to be included in the calculation of the trade tax base.
