In its judgment published today, the Second Senate of the Federal Constitutional Court confirms the solidarity surcharge in its current design and rejects the complaint brought by the six members of the liberal Party FDP.
By the end of January, the Supreme Tax Court will announce its decision whether the solidarity surcharge levied to income tax (and corporate tax) remains constitutional also for assessment periods 2020 and 2021.
The Supreme Tax Court has ruled that the solidarity surcharge for 2020 and 2021 is constitutional. According to the court, the federal government has conclusively demonstrated that there still is an increased financial demand for the sake of preserving the welfare state principle as provided in the German Basic Law.
In a decision published on 26 November 2021, the Federal Constitutional Court (Bundesverfassungsgericht,) declared as inadmissible a referral by the Supreme Tax Court (Bundesfinanzhof) regarding Section 3 of the Solidarity Surcharge Act 1995 as amended on October 15, 2002 (SSA, 1995).
The investigations regarding cum-ex and cum-cum transactions are continuing with a focus to uncover the intricate structures and recovering tax losses. Progress is being made but there are also several challenges, particularly regarding the statute of limitations and the elimination of evidence. In response to a question from the party Die Linke, the German government has commented on the current state of affairs.
On 10 November 2022, the Bundestag passed the bill introduced by the ruling Coalition "to compensate for inflation through a fair income tax rate and to adjust other tax regulations" (Inflation Compensation Act.)
Germany and Switzerland have initialled a treaty for the anonymous taxation of German assets in Switzerland whilst respecting the Swiss bank secrecy for criminals.
Social Democrats (SPD), the Green Party (Bündnis 90/Die Grünen) and the Liberals (FDP) have unexpectedly agreed on the implementation of selected measures from the Act for the Further Development of Tax Law (Tax Development Act) already before the early general election in February 2025. Politically highly controversial initiatives, above all the planned introduction of a national reporting obligation for tax structures, are not part of this settlement.
In a most recent decision, the Supreme Tax Court commented on the conditions for a waiver of late payment fees on grounds of the concessionary rule mentioned in Section 227 Fiscal Code following the rejection of the request for suspension of payment/stay of execution by the tax office.
The Hamburg Tax Court decided that the withdrawal of the refund or the credit of withholding tax in the wake of cum-ex schemes due to fraudulent misrepresentation is also possible if a third party committed the fraud.
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.
At its closed-door meeting in Meseberg on 30.8.2023, the Federal Cabinet adopted the government draft for a law to enhance growth opportunities, investment, and innovation as well as tax simplification and tax fairness (Growth Opportunities Act).
