In a decision published on 23 November 2017 the European Court of Justice (“ECJ”) again considered the question on the taxation of the transfer of assets of a foreign branch in exchange for new shares. The question was referred to it by the Administrative Court of Helsinki in Finland. The ECJ held that the taxpayer must be given the choice between an immediate charge to tax and a deferred payment of tax.
The Supreme Tax Court has held that the capital gain on the exchange of shares is realised when the shares are delivered but should be based on the value of the shares received when received.
The Supreme Tax Court has held that the exclusion of merger cost as part of the non-taxable profits and losses on merger also applies to indirect shareholdings.
The Supreme Tax Court has held that a share exchange at nominal value leading to a transfer of hidden reserves abroad triggers a taxable capital gain for the transferring shareholder.
The Supreme Tax Court has held that shares sold from a mixed holding should be identified from their serial numbers. GmbH shares sold should be identifiable from the contract.
On 14 December 2023, the German Financing for the Future Act (Zukunftsfinanzierungsgesetz, ZuFinG) went into force. The law aims at promoting corporate financing via capital markets and making shares more attractive to the public.
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.
