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.
The Supreme Tax Court has confirmed the tax-free limit of €110 for the benefit in kind from participation in staff outings and parties, but has reduced the cost items to be taken into account and has also taken the costs attributable to accompanying persons out of the calculation.
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 ruled that a hotel entertaining customers in its own restaurant is subject to the general 30% disallowance of otherwise reasonable business entertaining cost.
The finance ministry has distinguished between returnable containers sold with the content and subject to the same rate of VAT and transport packaging within the trade and subject to standard rate VAT.
The reduced Value Added Tax (VAT) rate does not only apply to the rental of land and the buildings fixed to it, but also in general to the rental of living and sleeping quarters by an entrepreneur for the short-term accommodation of strangers. According to the Supreme Tax Court this also includes the renting of non-stationary living containers to harvesters (seasonal workers).
According to the results of a joint conference of representatives of the Federal Government and local states (Länder) of 19 January 2021 a significant improvement in the tax treatment of certain digital assets is planned. --- The reaction of the tax authorities was not long in forthcoming.
According to Section 6(1) no. 3 Income Tax Act, non-interest-bearing liabilities with terms of at least 12 months, which do not constitute a deposit or advance payment, are to be discounted, i.e. a fictitious interest component (interest rate 5.5%) is initially deducted from profits and added back to profits in subsequent years as notional interest over the term of the loan.
In a most recent circular, the Federal Ministry of Finance (MoF) has commented on the input VAT deduction from services obtained by an entrepreneur prior to the switch from the standard taxation to taxation under the small business regime in Section 19 of the German Value Added Tax Act.
The Supreme Tax Court has held that the interest income of a German-owned limited partnership in England is taxable in Germany as interest, and not exempt as trading income. The capital gain on the sale of the property is not exempt as taxable in the UK, merely because of the capital allowance claw-back.
The Supreme Tax Court has held that a bottling plant may take up a provision for the deposits repayable on return of its own bottles, but not on those belonging to a pool. Payments for pool bottles in excess of the plant’s share in the pool are prepaid expenses or usage rights.
The Supreme Tax Court has decided that where an intermediary partnership holds direct or indirect interests in a real-estate-owning company, the relevant holding for establishing its interest in the related real-estate holding company, is its interest in the capital of the partnership and not the interest in the jointly owned property according to the law of property.
The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct are recommendations addressed by governments to multinational enterprises. They aim to encourage positive contributions enterprises can make to economic, environmental, and social progress, and to minimize adverse impacts on matters covered by the Guidelines that may be associated with an enterprise’s operations, products, and services. The 2023 update is now available!
Member States may authorize advertising measures to promote the purchase of unspecified prescription-only medicinal products in the form of price reductions or payments of an exact amount. In a most recent decision, the European Court of Justice also held that Member States may prohibit advertising measures to promote the purchase of the type of medicinal product where vouchers for the subsequent purchase of non-prescription medicinal products and health and care products are offered.
For income tax purposes, income of a partnership from leasing and letting or from capital assets is to be reclassified as trading income where the partnership also receives a negligible amount of income from a participation in a trading partnership; however, such “tainted” income is not subject to trade tax.
In a decision published in March 2017 the Supreme Tax Court held that - in the case of a two-tier partnership structure – the interest expense of the Dutch partner holding only an indirect share in a German limited partnership is nevertheless tax deductible when computing his limited German tax liability resulting from his investment in the German partnership.
