EU General Court: UK CFC rules in force until 2018 are State ...

In a recent judgment the General Court of the EU dismissed the applications of two joint cases seeking annulment of the European Commission’s State aid decision on the UK Controlled Foreign Company (CFC) rules in force until 31 December 2018.

New decree by Federal Ministry of Finance extends motive tes ...

On 17 March 2021, the German Federal Ministry of Finance (BMF) published a decree on the application of Section 8 (2) of the Foreign Tax Act (AStG) which stipulates the “motive test” taxpayers have to meet to escape controlled foreign company (CFC) taxation.

CFC rules considered to be in line with EU law

Following a ruling by the European Court of Justice (ECJ) earlier this year, the Supreme Tax Court held in its decision of 31 October 2019 that the incorporation into the tax base of controlled company income from invested capital from an intermediary company domiciled in Switzerland in the financial year 2006 may restrict the free movement of capital, but it is justified through compelling reasons of public interest and does not therefore contravene EU law.

新ドイツCFC税制（タックスヘイブン税制）の施行

German CFC rules may be compatible with EU law

The European Court of Justice held that the German CFC regulations – as such – do not generally pose a restriction on the freedom of establishment.

Trade tax: foreign passive income attribution

Two decisions of the Baden-Württemberg Tax Court have been published in connection with the attribution of foreign passive income for trade tax purposes. In these decisions the Court also raises doubts as to whether the add-back of this type of foreign income is compatible with EU law.

Government draft for the implementation of the Anti-Tax Avoi ...

On 24 March 2021, a government draft bill aiming to implement the Anti-Tax Avoidance Directive (ATAD) passed the cabinet (in the following referred to as “Draft”) after lengthy political efforts.

Active business can be contracted out

The Supreme Tax Court has held that a Dublin docks reinsurance company that subcontracted its operation under a management agreement was an active business within the meaning of the Foreign Tax Act.

Tax & Legal News: Issue 4 - November 2019

Our November 2019 Newsletter includes news about the Finance Act 2019 and the Land Tax reform, as well as news from the Supreme Tax Court and the European Court of Justice.

Group tax considerations not good cause for breaking a tax g ...

The Supreme Tax Court has held that a sale of shareholdings within a group was not sufficiently good cause for breaking an unwanted German tax group before its expiry date.

German Finance Minister talks “minimum taxation”

According to various statements of the German Finance Minister Olaf Scholz on 22 May 2019, a system of international minimum taxation will be discussed at the forthcoming G20 (June 2019) and G7 (August 2019) meetings. The aim is to agree such a system (within the terms of the Global Anti-Base Erosion "GloBE" agenda and given the name “BEPS 2.0”) with the other 128 states of the OECD in the Summer of 2020.

Tax & Legal News - Issue 4, June 2018

Some of the topics in this issue: Administration amends circular on treaty-shopping rules, Pensions paid abroad subject to limited tax liability, ECJ - Denmark to set-off final losses of foreign EU-branch.

Common Consolidated Corporate Tax Base (CCCTB)

The European Commission has published a proposed CCCBT directive to allow groups active in more than one member state to opt for taxation on a single, consolidated tax base to be allocated over member states on a set formula. Assessment and collection would be by each member state under its own rules and at its own rates.

No foreign passive income attribution for trade tax

The Supreme Tax Court has held that the foreign passive income attributed to a domestic parent is to be seen as stemming from a foreign business establishment and is therefore exempt from trade tax.

ECJ decision German CFC regulations to be published on 31 Ma ...

The publication of the decision of the European Court for Justice (ECJ) in the Hornbach-Baumarkt case is scheduled for 31 May 2018.

US corporate tax reform planned

2017 seems to be the year for tax reform: There are currently major changes to the US tax system discussed that may also have a significant impact on German companies. German tax consequences of potential restructurings in response to the upcoming US tax reform must therefore be considered already at an early stage and the current developments be constantly monitored.

ECJ: Passive income attribution from controlled companies re ...

The European Court of Justice has held that the German provision for the taxation of  controlled company income from invested capital from outside the EU might fall under the “grandfather” clause of Art 64 TFEU, provided the German legislation has remained substantially unchanged since that date. It is now for the Supreme Tax Court to decide finally whether this is the case.

UPDATE: Bundestag approves Tax Haven Defence Act

On 10 June 2021, the Bundestag approved the "Act to avert tax avoidance and unfair tax competition and to amend other laws". In doing so, the Bundestag followed the recommendation of the Finance Committee.

Plans to restrict the deduction of royalty expenses to comba ...

On 25 January 2017 the federal government approved a draft of the Act to Combat Harmful Tax Practices in connection with the Licensing of Rights. The intention is to prevent multinational businesses from transferring their royalty income to countries, which offer such income preferential treatment. Such preferential tax regimes (so-called Licence Boxes, Patent Boxes or IP-Boxes) are considered not to meet the demands of the OECD and G20 BEPS Project. A new provision is to be introduced to the Income Tax Act (ITA) for this purpose; the new provision should be applied to expenses arising after 31 December 2017.

Tax administration issues guidelines on use of group name

The German Finance Ministry has commented on possible profit adjustments under Sec. 1 Foreign Tax Act with respect to the use of group name and logo between the taxpayer and a related party.