The finance ministry has issued a decree on the application of subject to tax rules in treaties where taxation in the state of source is not immediate or full.
The subject-to-tax provision of the Parent-Subsidiary Directive, whereby distributed dividends are exempt from withholding tax, requires that the dividends are taxed in the hands of the parent company. In practice, this necessitates actual payment of the tax.
An employer's certificate is sufficient for the proof of taxation of wages in India in order to claim tax exemption under the relevant terms of the Double Tax Treaty between Germany and India. The submission of an official income tax assessment notice is not mandatory for claiming the exemption under the subject-to-tax clause of the German Income Tax Act.
In a case decided by the Supreme Tax Court, an application submitted to the Portuguese tax authorities before 1 April 2020 led to a ten-year tax exemption of the pension income for a taxpayer who had permanently moved to Portugal However, in order to prevent a double non-taxation in such cases Germany has agreed a subject-to-tax clause with Portugal if such income is not taxed in Portugal.
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 most recent judgment, the Supreme Tax Court decided that in a case where an employee working in both Germany and Switzerland until the termination of the employment relationship and thereafter is irrevocably released from his duties with continued payment of his salary, the income from employment pursuant to Art. 15 para. 1 sentence 1 of the double tax agreement between Germany and Switzerland is subject to tax only in Germany as the country of residence.
The Federal Finance Ministry circular of 12 November 2014 on the taxation of salaries for tax treaty purposes has been revised by a committee made up of from both the Federal and the States’ governments.
In a recent ruling, the Münster Tax Court had to decide on the income tax and treaty law treatment of a severance payment received by the plaintiff as a soldier in the British armed forces
Interest on trade tax refunds pursuant to Section 233a of the General Tax Code (AO) must be recorded as business income when determining taxable income. In a most recently published decision the Supreme Tax Court further stated that the treatment of interest that is not deductible (i. e. added back to income) as interest on arrears pursuant to Section 4 (5b) Income Tax Act versus interest refunds which are subject to income tax does not violate the principle of equality under the Basic Law.
In a recently published decision, the Supreme Tax Court commented on the repurchase of shares in a property-owning company where the previous acquisition was not subject to real estate transfer tax. Another case decided on the same date concerned the annulment of a chargeable transfer (concentration of 100% of the shares in the property-owning company) which later was reversed a second time restoring the initial level of shareholding.
In two similar decisions the Supreme Tax Court held that amounts charged for subsequent special requests for a property yet to be built are subject to real estate transfer tax if there is a legal relationship to the original property purchase agreement. These costs are then assessed in a subsequent separate tax notice. However, this does not apply to house connection costs if the property buyer has already agreed to assume these costs in the (original) property purchase agreement.
The correction of a final tax assessment notice pursuant to Section 50d (8) sentence 2 of the German Income Tax Act is only possible if – contrary to the provision in the double tax treaty - the employment income of an unlimited taxpayer has been wrongly included in the income tax assessment by omitting to produce proper documentation as required in Section 50d (8) Income Tax Act. It follows from this decision of the Supreme Tax Court that the possibilities of amending tax assessment under Section 50d (8) sentence 2 Income Tax Act are strictly limited and only apply in exceptional cases.
In an interim decision, dated 9 July 2025 (II B 13/25 (AdV) and published on 31 July 2025, the Supreme Tax Court considered it doubtful, following a summary examination, that in cases where the contractual acquisition transaction (signing) and the transfer of the shares (closing) take place at different times, real estate transfer tax can be assessed twice – namely once upon signing under Section 1(3) No. 1 of the German Real Estate Transfer Tax Act (“RETTA)” (signing) and once upon closing under Section 1(2b) RETTA – if the tax office is aware at the time of assessment for the signing that the closing has already occurred.
The Supreme Tax Court has followed an ECJ case in holding that a foreign corporate shareholder may claim from the local tax office a refund of the tax deducted at source from its dividend.
The Supreme Tax Court has followed an ECJ case in holding that a foreign corporate shareholder may claim from the local tax office a refund of the tax deducted at source from its dividend.
According to a decision of the Supreme Tax Court the so called “extended unlimited gift tax liability” does not violate the constitutional principle of equality and the freedom of movement of capital under EU law. The German gift tax arises if the donor is a resident at the time the gift is made, or the acquirer is a resident at the time the tax arises. If this is the case, the tax is levied for the total amount of assets received, irrespective of whether these are of domestic or foreign origin.
