Tax & Legal

The German Central Tax office reminds of the reporting requirements pursuant to Section 138 (2) sentence 1 No. 4 of the German Fiscal Code and the consequences due to Brexit.

Even after the United Kingdom's withdrawal from the European Union a British limited company is still subject to corporate tax and therefore also eligible as party to proceedings before the fiscal courts. According to the Supreme Tax Court the capacity to participate in tax court proceedings is not determined under civil law, but in compliance with the tax law.

On 13 December 2018 the Federal Ministry of Finance published a draft bill for the enactment of tax and other regulations for Brexit (“Brexit Bill”)designed to alleviate certain legal consequences arising by reason of Brexit alone.

Prior to the announcement on 21 March 2019 that Brexit may be postponed until either 12 April 2019, 22 May 2019 or possibly later, the British tax and customs authorities (HMRC) issued guidance on 18 March 2019 on the changes to VAT IT systems in the event of the United Kingdom leaving the EU on 29 March 2019 without a deal.

In a most recently published judgment, the Supreme Tax Court decided that exit taxation - a process in which hidden reserves of assets (built-in gains) are identified and taxed because otherwise Germany would lose its right of taxation - can, in principle, also occur through a mere change in the law (so called „passive“ exit taxation).

In a case where Germany lost the right to tax the investment in a Spanish corporation the Supreme Tax Court - in contrast to the opinion held by the tax administration - decided that the German exit taxation pursuant to Section 6 para. 1 sentence 1 Foreign Tax Act applies to the year in which the German unlimited income tax liability ends and not at the later point in time when the limited tax liability arises.

On 27 February 2023 the European Commission and the Government of the United Kingdom reached a political agreement in principle on the Windsor Framework. This constitutes a comprehensive set of joint solutions aimed at addressing, in a definitive way, the practical challenges faced by citizens and businesses in Northern Ireland, thereby providing them with lasting certainty and predictability.

The German Federal Ministry of Finance has commented on the tax consequences of a UK limited company which has been removed from the British register of companies (Companies House) after 31 December 2020.

According to a decision of the Supreme Tax Court the exception from the exit taxation due to an "only temporary absence" must be granted if the taxpayer again becomes subject to unlimited income tax within five years after leaving Germany and irrespective of the question whether he had from the outset the intention to return.

The time has come to say goodbye: Today UK Prime Minister Theresa May formally invoked Article 50 of the Lisbon Treaty thus initiating the formal negotiations for her country’s departure from the European Union. A PwC special report looks at the potential outcome with respect to tax, legal and people.

Brexit: The United Kingdom of England, Wales, Scotland and Northern Ireland is leaving the European Union: A first analysis of the potential tax implications.

The Supreme Tax Court referred to the European Court of Justice the question whether, in accordance with the principle of effectiveness, EU law precludes a national practice whereby the taxpayer's good faith in fulfilling the conditions for the margin scheme is not taken into account during the tax assessment procedure but rather considered later in fully separate proceedings.

On 28 April 2025 the EU Commission presented its plan to modernize EU lawmaking, ensuring that laws are clearer, simpler, more efficiently enforced, based on solid evidence and better aligned with the needs of citizens and businesses.

Unlocking the full potential of the Single Market for Europe's entrepreneurs: On 18 March 2026 the European Commission presented its proposal for EU Inc., which is an optional, digital-by-default European corporate framework. It will make it easier for businesses to start, operate and grow across the EU – incentivizing them to stay in Europe, and encourage those who once looked elsewhere to return.

In a most recent judgment, the Supreme Tax Court decided that an invoice for advance payment entitles the recipient to deduct the underlying input VAT even if it does not include an explicit reference as to the “advance payment” and provided it is apparent that the payment is made for a service still to be supplied.

A taxpayer who emigrated to the U.K. and who exercised his right under U.K. tax law to pay tax on income not earned in the U.K. on a "remittance basis" is caught by the preferential taxation regime of Sec. 2 (2) No. 2 Foreign Tax Act and subject to extended limited tax liability in Germany.

In a recent decision, the Supreme Tax Court held that a multi-storey car park (parking garage) is not eligible for the inheritance tax privilege available for business assets.

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.

Following the recommendation of its Finance Committee, the Bundestag adopted the Finance Act 2024 (FA 2024) in an amended version on 18 October 2024.

Issue 1 of the Tax & Legal News for 2020 contains includes news from the Supreme Tax Court and the Finance Ministry: