The Supreme Tax Court has commented on the requirements for an item of daily use and decided that the profit/loss from the sale of high-priced everyday items is not taxable as capital gain from "private disposals" (Section 23 (1) No. 2 Sentence 2 Income Tax Act).
Where real estate is sold within ten years of acquisition, the gain realized is subject to taxation. Real estate that was used exclusively for the taxpayer's own residential purposes in the period between acquisition and sale is exempt. According to the Supreme Tax Court in its ruling of 26.10.2021 ( IX R 5/21) such privileged use also occurs where the taxpayer permanently occupies a "garden house" (fully connected to the relevant utilities) in violation of building law.
The Supreme Tax Court has held that the tax-free gain on the sale of shares is net of direct costs of sale. The additional disallowance of 5% of the tax-free amount is to cover indirect costs.
The Supreme Tax Court has held that the capital gain on the sale of shares is the difference between the historical acquisition cost and the net proceeds received.
In the case of the transfer of assets for partial consideration, the gain is from a private sale and must be allocated into a transaction for consideration and a gratuitous part based on the ratio of the consideration to the market value of the transferred asset. According to the Supreme Tax Court, this also applies if the consideration is below the initial (acquisition) costs.
The Supreme Tax Court has held that the capital gain on the sale of a foreign investment is the difference between the amount paid in euros and the amount received in euros.
The Supreme Tax Court has held that the pre-2009 loss on the sale of a bond with a floating interest rate could only be offset against capital gains on the sale of investments in the same or in future years.
The Supreme Tax Court has held that gains from the sale of profit participating rights acquired up to December 31, 2008 are to be tax-free under the continued application of old law.
The Hesse Tax Court has decided that the immediate taxation of a contribution gain pursuant to Section 22 (2) of the Reorganization Tax Act in conjunction with Section 17 of the German Income Tax Act violates the EU Merger Directive if it is applied on a general basis to cross-border contributions within a seven-year period. According to the court, this current provision wrongfully presumes an abusive sale of shares and leads to an impermissible retroactive taxation of hidden reserves.
In a recently published decision, the Supreme Tax Court held that the profit from the sale of a limited partnership share which is proportionally encumbered with an atypical sub-participation is fully subject to trade tax.
In a recently published judgment, the Supreme Tax Court held that the profit from the sale of the share in a project company in the legal form of a partnership (GmbH & Co. KG) is not included in the trading income of the plaintiff, a limited liability company (GmbH), because the conditions for trade tax liability - namely, the operation of a business as defined in Section 2 (1) Sentence 1 of the Trade Tax Act - were not (yet) met.
The profit from the sale of a share in the upper-tier partnership as prescribed in Section 7 sentence 2 no. 2 Trade Tax Act is not to be allocated to the hidden reserves of the upper-tier partnership and the hidden reserves of the lower-tier partnership. It is rather a single and uniform sales transaction at the level of the upper-tier partnership, the Supreme Tax Court said in a most recently published decision.
Gains realized by taxpayers within one year from the sale or exchange of cryptocurrencies such as Bitcoin, Ethereum and Monero are subject to taxation as a private capital gain. At least as far as the year 2017 was concerned the Supreme Tax Court held that there was no normative enforcement deficit in the recognition and taxation of transactions with currency tokens which could be viewed as unconstitutional.
In a case of the sale of property belonging to the estate of an association of co-heirs the Supreme Tax Court held that the acquisition for consideration of a joint shareholding is not equivalent to the direct pro rata acquisition of the inherited assets themselves. With this most recent judgment the Supreme Tax Court abandons its previous case law on the matter.
Tax consultancy expenses incurred in connection with the preparation of the tax return and the determination of the profit from the sale of a shareholding in a corporation are not tax-deductible costs of disposal within the meaning of Section 17(2) sentence 1 of the Income Tax Act.
In a recent judgment, the Supreme Tax Court decided that the sale of educational institutions (training faculties) is not a service directly serving the purpose of schooling and education and is therefore not exempt from trade tax.
If the taxpayer has arranged for the sale of a property to a third party, there is generally no abuse of tax law (abuse of legal forms) if the property was initially transferred to the children free of charge and subsequently sold by the children to the ultimate buyer. According to the decision of the Supreme Tax Court the capital gain is subject to income tax in the hands of the children based on their individual income tax situation.
In a most recent decision the Supreme Tax Court held that the sale of a separate undeveloped (garden) property is not exempt from income tax on the grounds that it was not before used for personal residential purposes.
The Supreme Tax Court has accepted the sale of mining rights attaching to a property no longer owned by the seller as the sale of a real estate right to be taxed as a capital gain.
The European Commission decided to refer Germany to the European Court of Justice for having failed to remedy the infringement of the free movement of capital (Article 63 TFEU and Article 40 of the EEA Agreement) due to its discriminatory tax treatment of reinvested capital gains upon sale of real estate located in Germany.
