In a recently issued judgment, the Supreme Tax Court decided that, upon the opening of insolvency proceedings, the second correction due to uncollectible amounts does not depend on the accuracy of the first correction made in the insolvency process. The correction made at the expense of the insolvency estate is separate from the previous correction.
Compensation payments of the (insolvent) debtor to the insolvency estate as a result of the insolvency court’s approval of his self-employment do not constitute business expenses in connection with his income from self-employment, the Supreme Tax Court said in a most recently published decision.
The dispute before the Supreme Tax Court concerned the question of whether the tax office was correct to adjust an input VAT deduction of the plaintiff - following a successful appeal under insolvency law - where the plaintiff later received a refund of the import VAT paid. The court could not see any reasons why the plaintiff should receive a refund even though it no longer owed the tax.
The request for a preliminary ruling from Bulgaria concerns the joint and several liability of a third party for the VAT debts of a person liable for payment of that VAT (a company) where that person no longer exists, and where the liability of that third party was not prescribed until after that company’s liquidation. The Advocate General has submitted her Opinion.
The profit pooling agreement under the concept of a tax consolidation group (Organschaft) must be concluded for at least five years and be followed throughout its entire term. According to the decision of the Supreme Tax Court recognition of the Organschaft is to be denied with retroactive effect if preliminary annual financial statements of the controlled company can no longer be adjusted due to insolvency and if a different result would have been reported in the final annual financial statements if the accounting principles under commercial law had been applied correctly.
In a preliminary request from Lithuania the European Court of Justice has ruled that it is contrary to EU law for the local tax authority to deny an input VAT deduction on the grounds of alleged abuse of rights solely because the seller is insolvent, and the buyer was aware of this situation.
The request for a preliminary ruling from Bulgaria concerns the joint and several liability of a third party for the VAT debts of a person liable for payment of that VAT (a company) where that person no longer exists, and where the liability of that third party was not prescribed until after that company’s liquidation (here, removal of the principal debtor from the commercial register).
In its ruling of 24 September 2024, the Brandenburg Higher Regional Court clarified that a managing director is in breach of his duty if he withdraws assets from the company for his own benefit and to the detriment of the company. The withdrawal of company assets without compensation by the managing director, who was also a shareholder, also constituted an existence-threatening intervention and led to liability under Section 826 of the German Civil Code (BGB).
If the shareholder's right of membership in a domestic stock corporation (AG) lapses because the AG is dissolved, wound up and deleted from the register as a result of insolvency, the shareholder incurs a taxable loss if he does not receive his contribution back in full or in part.
The Supreme Tax Court had asked the European Court of Justice for a preliminary ruling on the question of a direct refund claim in the case of incorrectly invoiced and paid German VAT in the event of the supplier's insolvency. In its judgment, the ECJ is of the opinion that the recipient of the service cannot claim a refund of the VAT paid to the supplier directly from the tax authorities of his Member State.
Following a preliminary request from the Münster Tax Court the ECJ ruled that the recipient of supplies of goods has a direct claim towards the tax authorities for reimbursement of improperly invoiced VAT he paid to the suppliers and which has been duly transferred by the latter to the treasury, even if the recipient can no longer turn directly to his suppliers for reimbursement due to the statute of limitation as provided for by national law.
Section 15b Income Tax Act dealing with the restriction of loss utilization for tax deferral models does not presuppose that an investment is not economically sensible or has not proved particularly successful. The restriction for an offset and deduction of losses from tax deferral models is also constitutional in the case of a so-called definitive loss. This was currently decided by the Supreme Tax Court who hereby confirmed its previous case law on this matter.
In a recent case, the Supreme Tax Court decided that the liability of a controlled company (subsidiary) in a tax consolidation group (“Organschaft”) for the tax liability of its controlling company (parent in the Organschaft) is not necessarily limited to such taxes which arose during the existence of the Organschaft. The controlled company may be liable to the extent that the parent is required to pay tax on the controlled company’s turnover and may deduct input tax amounts from invoices for services obtained by the controlled company.
In two decisions the European Court of Justice (ECJ) held that the General Data Protection Regulation (GDPR) opposes two data processing practices by credit information agencies. While ‘scoring’ is permitted only under certain conditions, the prolonged retention of information relating to the granting of a discharge from remaining debts is contrary to the GDPR.
Where an insolvency practitioner prepares an annual balance sheet, his claim to a payment-on- account is to be treated as a part of the final fee and does not lead to a realisation of profits upon receipt.
In a Czech request for a preliminary ruling, the European Court of Justice (ECJ) dealt with the joint and several liability of the recipient of a supply who supposedly was involved in VAT fraud for VAT not paid by the supplier. According to the judgment of the ECJ, Article 205 of the VAT Directive does not prevent the recipient from being held liable under such circumstances.
The Supreme Tax Court once again decided on pension promises to a managing director who is also the majority shareholder of the employer company and specified in more detail the rules for distinguishing allowable business expenses from disallowable “hidden distributions”. In the case at hand the plaintiff received compensation for early termination of pension claims as a result of significant financial difficulties of the company.
The General Court of the EU decided today that affected shareholders and creditors in the course of winding up Spain's ailing Banco Popular in 2017 were not entitled to compensation from the Single Resolution Fund, as they would not have received better treatment in the event of the liquidation of the bank than that resulting from its resolution.
In a recently published decision, the Supreme Tax Court has, in some aspects, facilitated the tax recognition of employee-financed pension commitments for shareholder managing directors of a limited liability company (GmbH) but at the same time it also set some limits.
The Supreme Tax Court decided in the specific case of a Contractual Trust Arrangement that a fiduciary relationship within the meaning of Section 39 (2) No. 1 Sentence 2 of the German Fiscal Code which is recognized for tax purposes may still exist after insolvency proceedings were initiated over the assets of the trustor.
