Corporations with at least a 25% share in a Société d'investissement à capital variable (SICAV), a Luxembourg investment company, do not have to pay income tax in Germany on the dividends received from the SICAV in 2010. This also applies if the Luxembourg tax authorities – for whatever reason - did not exercise their right of taxation at source and the distributions hence remained untaxed.
The Düsseldorf Tax Court has decided that a so-called bond stripping model involving a partnership limited by shares (KGaA) as a shareholder in a Luxembourg Société d’Investissement à Capital Variable (SICAV) constitutes an abuse of legal form under Section 42 of the German General Tax Code (Abgabenordnung). Does this really mark the end of the legal proceedings that have been ongoing since 2018?
The finance ministry has published a decree asking tax offices to reject brokered bond stripping schemes between German and Luxembourg investment funds abusing the treaty protection of dividends.
The Supreme Tax Court reversed three earlier rulings of the Baden-Wuerttemberg Tax Court and decided that Sweden has no right of taxation, even if at the time of the gift the gift tax had been abolished in Sweden (here: as of 1 January 2005). As a result, a gift made by a donor who has his residence both in Germany and Sweden is subject to the provisions of the German Inheritance and Gift Tax Act.
In a resolution regarding the request for suspension of payment the Supreme Tax Court endorsed the different VAT treatment of terrestrial (physical) gambling versus VAT exempt online gambling. Furthermore, the court held that this unequal treatment is not contrary to the EU principles of fiscal neutrality.
The Supreme Tax Court has asked the European Court of Justice (ECJ) for a preliminary ruling regarding the entry of a sailing boat into the economic network of the Union. One of the questions referred to the ECJ is whether a means of transport enters the economic cycle of the Union if it is not used as such in a Member State but rather a service (here: maintenance and repair work) is carried out at the boat.
The ECJ held that Article 132(1)(m) of Council Directive 2006/112/EC exempting ‘the supply of certain services closely linked to the practice of sport or physical education’ is not being of direct effect and cannot be directly invoked before the national (local) courts. It is for the national court to determine in detail what kind of services provided by sports clubs are exempt from VAT.
The finance ministry has published a draft tax amending bill, basically to enact ECJ judgments against existing provisions and to react to perceived abuses and anomalies.
The Supreme Tax Court has held the tax office to be correct in insisting that a gaming hall operator apportions his inputs by turnover, rather than by space used, where the physical division was only temporary.
On 6 July 2022 the Finance Committee of the German Bundestag (whose working scope basically coincides with the responsibilities of the Federal Ministry of Finance) approved specific revisions to the double tax treaties with Mauritius and Mexico.
The invalidity of a legal transaction under national civil law cannot as such lead to the exclusion of the deduction of input VAT. According to a decision of the ECJ, however, this only applies if the national court has examined and ensured that the transaction is not a fictitious transaction or that, if this transaction was physically carried out, it is neither in connection with VAT evasion nor considered as an abuse of rights.
The cabinet has adopted a bill to regulate the automatic exchange of bank account and investment income information with the 60 co-signatory states of the “multilateral competent authority agreement on automatic exchange of financial account information”.
The Supreme Tax Court held that only work actually performed abroad may be included when reviewing the 183-day period under the employment income regime of the German-French tax treaty. Interruptions caused by work-free time on sundays, weekends,and holidays would generally not be counted.
The Federal Tax Office, by way of a circular, has adjusted its VAT Application Ordinance with regard to the 2019 ruling by the European Court of Justice on the determination of the place of supply of services in connection to the admission to educational events.
In a most recent decision, the Supreme Tax Court held that payments for granting cable retransmission rights may be added back for trade tax purposes pursuant to Section 8 No. 1 (f) of the German Trade Tax Act.
Our Newsletter comments upon the recent trend of German tax authorities - particularly during wage tax audits - to consider whether a wage tax withholding obligation has arisen in cases where non-resident managing directors, board members and, in some cases, authorized signatories of German companies work for and in the interest of a German legal entity.
The finance ministry has issued a decree to the effect that a capital repayment by a company from another EEA country will not be recognised as such unless the company makes a formal application for recognition.
The Supreme Tax Court has held that work performed in Austria by a German resident is taxable there under the double tax treaty. However, any work performed in a third country is taxable in Germany as the country of residence.
