Tax & Legal

The finance ministry has published an extensive decree on the procedures to be followed when accounting for withholding taxes on the fees paid to non-resident artists, athletes, actors and entertainers.

An agreement under which a sportsman under the age of majority is obliged to share part of his future income once he becomes a professional athlete may be in breach of the Directive on unfair terms in consumer contracts. The European Court of Justice held, that the national court must assess the unfairness of such a term by considering whether a legal clause to that effect is plain and intelligible as regards the financial consequences of the commitment.

In a recent ruling, the Supreme Tax Court decided that payments made by the German Sports Aid Foundation (Stiftung Deutsche Sporthilfe) to an athlete constitute business income of the athlete and thus is not only subject to income tax but also trade tax.

The Supreme Tax Court has held that a payment to an Austrian agency for the right to broadcast sporting events is not subject to withholding tax as a payment to the athlete(s) appearing.

In a decision on 30 August 2017 the Supreme Tax Court held that where a third party provides his employees to a football club to serve as players, trainers or counsellors without receiving adequate consideration, the waiver of such compensation is to be considered as a taxable gift of the third party to the football club.

Is the income earned by a disc jockey taxable as income from a trade or business? Thanks to the persistence of a member of this profession, the question has now been answered. The lawsuit of a disc jockey against his local tax office which took the income as genuine business income was successful: The regional tax court of Duesseldorf held that as an artist he generates income from self-employment and therefore is not subject to trade tax.

An orchestra musician employed by a public corporation in the Grand Duchy of Luxembourg is an artist within the meaning of Article 16 (1) of the double tax treaty between Germany and Luxembourg. The Supreme Tax Court has recently decided that his salary is taxable in Germany as income from employment with a credit of the tax paid in Luxembourg.

The ECJ has held that the withholding tax on a royalty paid to a corporation in another EU country may not be more than the corporation tax rate applied to the income less the directly related costs.

The Supreme Tax Court has held that the withholding tax on royalty payments to licensors in other EU states should be on the net amount after deduction of direct costs.

In a recent ruling, the Supreme Tax Court has commented on the tax treatment of fees paid to artists with limited tax liability for their performances in Germany. A key criterion for tax deduction at source is the intention to make a profit and the commercial objective of the performances in Germany.

In a most recent decision, the Supreme Tax Court held that winnings from online poker games can be subject to income tax. If a poker player plays regularly and successfully in poker tournaments, the gains are qualified as income from a trade or business.

According to a most recent decision of the Supreme Tax Court, the income from employment of a pilot resident in Germany and who is employed in international air traffic by a Swiss-based company is only exempt from German income tax (subject to progression) to the extent that he performs his activity on Swiss soil and in Swiss airspace in accordance with the principle of territoriality.

The Supreme Tax Court has allowed a manoeuvre effectively avoiding forfeiture of a loss carry-forward on change of shareholder through the sale of a worthless shareholder loan to a new shareholder followed by recovery from the injection of new capital.

The Supreme Tax Court has held that the issuer of an apparent invoice is liable for the VAT shown thereon, even if the invoice is incomplete.

The Supreme Tax Court has confirmed the Central Tax Office’ rejection of a foreign business VAT refund claim because the form had not been completely filled out.

The Supreme Tax Court has granted a taxpayer’s appeal against a real estate transfer tax assessment on the grounds that an indirect change in the shareholdings in the members of a property owning partnership was less than a complete change of interest in the partnership.

In its referral to the European Court of Justice (ECJ) for a preliminary ruling, the Regional Tax Court of Bremen raises doubts as to whether the penalty surcharge under Section 162 (4) Fiscal Code due on failure to present proper documentation in cross border business relations is in line with the freedom of establishment in Art. 49 TFEU and the freedom to provide services (Art. 56 TFEU).

The Supreme Tax Court has held that an employee can write off a bond issued by his now insolvent employer as an expense of earning income if he accepted the bond as the only possible remuneration for work down.

The Supreme Tax Court has (again) held that failure to observe the full documentation formalities in respect of EU supplies can lead to taxation as domestic sales.

A shareholder with a 50.1% stake in a limited liability company (GmbH) who reduces his debt by assigning a non-valuable position designated as a right of first refusal in connection with a property belonging to him to another group company which he indirectly controls might face the consequences of a hidden profit distribution. In a recent judgment the Supreme Tax Court held that this is the case if the GmbH “pays” for this by “taking over” the negative clearing account with the other group company.