Tax & Legal

Based on the German tax provisions existing in the years in dispute 2008 through 2010, resident and non-resident special real estate funds are treated differently, which is disadvantageous for non-resident special real estate funds. In its decision the ECJ sees a restriction on the free movement of capital which cannot be justified by overriding reasons of public interest.

In a request for a preliminary ruling from Sweden regarding the refund of withholding tax, the ECJ is asked whether a recalculation of the loss in accordance with the rules of the source State is required for a loss-making non-resident company receiving dividends to benefit from the same treatment as a loss-making resident company. In his Opinion, the Advocate General considers such requirements to be an unjustified and disproportionate burden on foreign corporate entities and a violation of Article 63 TFEU.

In a most recent decision on the procedural approach to obtain a WHT exemption, the European Court of Justice (ECJ) has reaffirmed that procedural aspects and formalities can amount to disguised restrictions, and that the practical realization of fundamental freedoms must be ensured. This requires considering not only the relevant provisions of tax law but also any procedural requirements and formalities that may hinder the application of tax benefits or relief.

The German rules on the procedure and documentation requirements for withholding tax refunds to non-resident portfolio shareholders are not compatible with the EU principles on the free movement of capital, as the European Court of Justice (ECJ) said in a most recent decision.

Today, the European Commission decided to refer Belgium to the European Court of Justice for its failure to comply with the Treaty principle of free movement of workers, as regards taxation of non-resident taxpayers with modest income.

The European Court of Justice must currently review an Italian regulation that prevents certain companies from benefiting from a more favorable rule regarding the deductibility of interest expenses in the case of a cross-border group taxation scheme solely because their common parent company is resident in another Member State. Advocate General Juliane Kokott presented her Opinion on the matter and suggests the court decide that such national legislation is not hindered by the freedom of establishment under Articles 49 and 54 TFEU.

Does the free movement of capital require a Member State to tax non-resident and resident investment vehicles according to the same tax system? This is the question raised in the request for a preliminary ruling submitted to the European Court of Justice (ECJ) by the Portuguese tax court (Tax Arbitration Tribunal). Contrary to the Opinion of the Advocate General the ECJ decided that the withholding tax on dividends paid to non-resident Undertakings for Collective Investments in Transferable Securities (UCITS) is in violation with current EU Law.

On 30 June 2026, the German Central Bank (Deutsche Bundesbank) published a revised edition of its ‘Explanatory Notes on Foreign Trade Reporting’ (the Explanatory Notes). Among other matters, the Explanatory Notes provide further clarification on the reporting requirements for crypto-assets under the German Foreign Trade and Payments Regulation (Außenwirtschaftsverordnung – AWV).

The General Court invalidates the Commission’s decision declaring the Spanish tax scheme on the deduction for indirect acquisitions of shareholdings in foreign companies unlawful.

A foreign permanent establishment of a legally independent person resident in Germany cannot be viewed as employer. This was decided by the Supreme Tax Court in a recent judgment regarding the double tax treaties with the Netherlands, Japan, the UK, Spain, Australia, Ireland, Belgium, Switzerland, Italy, Denmark, Canada, Singapore, Norway, Greece and France.

In a most recent decision, the Supreme Tax Court held that a foreign investment fund who received dividends from domestic stock corporations which were subject to tax withholding (capital gains tax) under the 2004 Investment Tax Act is in general entitled to a refund of this tax under the principles of EU law.

In a currently published judgment, the European Court of Justice held that the German regulation providing favorable inheritance tax classes for domestic family foundations which are not available to foreign family foundations does not contravene the fundamental principle for free movement of capital provided that the legislation in question complies with the principle of proportionality.

In a Romanian case, the ECJ decided that a contract providing for the processing of the application for VAT refunds from the tax authorities of several Member States is to be a "supply of services" within the meaning of Article 57 TFEU. Furthermore, the ECJ stated that the tax exemption for transport services in connection with importation cannot be denied from the outset if other qualifying documents are presented to support the importation. The levy of withholding tax on handling fees paid to a foreign service provider was also dealt with by the ECJ.

The trade tax addback of foreign portfolio dividends in the year 2001 is in line with the EU provision on the free movement of capital in Article 63 TFEU (formerly: Article 56 TEC). This was decided by the European Court of Justice in an answer to a preliminary request submitted by the Supreme Tax Court.

The ECJ has held that a non-resident taxpayer must be able to deduct an annuity paid in consideration for a business interest on the same lines as a resident.

In his Opinion of 20 January 2022, the Advocate General (AG) suggests to the European Court of Justice (ECJ) that Germany’s requirements for withholding tax claims filed by non-resident corporate taxpayers with seat or place of management in the EU or EEA are too strict in two respects and thus in violation of Article 63 TFEU on the free movement of capital.

The European Court of Justice decided that the refusal of the option for full income tax assessment for German citizens living in Switzerland contravenes the principle of non-discrimination contained in the Agreement for the Free Movement of Persons between the EU and Switzerland.

In a recent ruling, the Supreme Tax Court has commented on the tax treatment of fees paid to artists with limited tax liability for their performances in Germany. A key criterion for tax deduction at source is the intention to make a profit and the commercial objective of the performances in Germany.

An ECJ advocate general has suggested the court hold for a second time that Germany must allow a non-resident a deduction on the same terms as a resident for a pension paid to his father in consideration of his early assumption of joint ownership in the family business.

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.