Unlocking the full potential of the Single Market for Europe's entrepreneurs: On 18 March 2026 the European Commission presented its proposal for EU Inc., which is an optional, digital-by-default European corporate framework. It will make it easier for businesses to start, operate and grow across the EU – incentivizing them to stay in Europe, and encourage those who once looked elsewhere to return.
On 26 March 2026 the Council and the Parliament agreed to overhaul the EU customs framework, giving the Union a more modern toolbox to deal with trends such as huge increases in trade volumes, especially in e-commerce, a fast-growing number of EU standards that must be checked at the border and challenging geopolitical realities.
The retroactive application of Section 13b (10) Inheritance and Gift Tax Act to gifts made prior to the promulgation of the revised version of the law on 9 November 2016 does not raise any constitutional doubts according to a most recently published judgment of the Supreme Tax Court.
In a recent decision, the Supreme Tax Court established legal certainty for parents who, as part of an anticipated succession plan, agree with their children during their lifetime on a waiver of the statutory share of the inheritance in exchange for a lump-sum payment. The judges at the highest tax court made it clear that such lump-sum payments, even if paid in installments, are not subject to tax as capital investment income or other income.
The mandatory restriction of the use of assets (dedication of assets) of a charitable institution is fulfilled if the statutes either specify the tax-privileged purpose in detail or sufficiently designate another tax-privileged corporation or legal entity under public law to which the assets are to be transferred for tax-privileged purposes after the dissolution or termination of the corporation or if its previous purpose has ceased to exist. This was decided by the Supreme Tax Court in a recently published judgment.
In a recently published judgment, the Supreme Tax Court clarified that, in the context of a silent partnership in a limited liability company, even a high degree of co-entrepreneurial initiative cannot establish the full status of a co-entrepreneur without at least a minimal co- entrepreneurial risk.
In a most recent judgment, the European Court of Justice addressed the issue whether VAT on mandatory healthcare equipment for tax-exempt services can be proportionally deducted if those items are also used for additional taxable services. The decision suggests that a statutory obligation to purchase goods and services doesn't automatically grant deduction, but that proportional deduction is possible if a direct link to taxable activities exists.
In two most recently published decisions the Supreme Tax Court commented on the VAT situation in the event of the sale of a business which is not turnover within the meaning of the VAT Act under certain circumstances. The court denied VAT exemption in both cases, namely where - after the sale - the business is continued by the lessee and where facilities in a solar park are transferred to various purchasers while continuing to feed electricity into the grid.
In its decision I R 37/22 of 5 November 2025, published on 12 March 2026, the Supreme Tax Court addresses the implementation of profit transfer agreements under Section 14(1), first sentence, no. 3, first sentence of the Corporation Tax Act. In particular, the Supreme Tax Court comments for the first time on the temporal requirements for the actual implementation of the profit transfer agreement.
The Hesse Tax Court has decided that the immediate taxation of a contribution gain pursuant to Section 22 (2) of the Reorganization Tax Act in conjunction with Section 17 of the German Income Tax Act violates the EU Merger Directive if it is applied on a general basis to cross-border contributions within a seven-year period. According to the court, this current provision wrongfully presumes an abusive sale of shares and leads to an impermissible retroactive taxation of hidden reserves.
In a most recent judgment following a Polish request for a preliminary ruling, the General Court of the EU confirmed the incompatibility of the local input VAT regulations with EU Law and held that the right to deduct input VAT arises with the supply and the chargeability of the tax, and must not depend on the immediate possession of an invoice provided that the taxable person did receive the invoice before submitting the VAT return. Any national “forced deferral” violates the principle of fiscal neutrality.
A non-profit association that entitles its sponsor to market the sponsorship measure as part of its advertising while at the same time indicating the association's promotion on its products is a service in return for the sponsorship funds received and as such fully deductible as business expense and not treated as donations. This was decided by the Hamburg Tax Court.
Once again, the European Court of Justice was asked to define the criteria for a voucher from a VAT point of view. The request for a preliminary ruling from the Swedish Supreme Administrative Court concerns a loyalty program with points earned based on the purchase price which can be redeemed later in a “points shop” in connection with a future purchase. The court held that loyalty points of this kind do not constitute a “voucher” within the meaning of Article 30a of the VAT Directive.
In a most current judgment, the European Court of Justice - following a request for a preliminary ruling from the Republic of Lithuania - decided that transactions involving the exchange of currency for virtual money in an online game do not meet the criteria for VAT exemption under Article 135 (1) Letter e of the VAT Directive. The court further emphasized that gold does not constitute a “voucher” and that therefore the entire proceeds from the sale is subject to VAT.
In three cases and following oral proceedings on 12 November 2025, the Supreme Tax Court held that using the capitalized earnings value method for the valuation of residential property to determine the land tax from January 1, 2025, to be constitutional.
In a most recent judgment, the European Court of Justice held, that the German legislation which excludes the reduced VAT rate applicable to short-term accommodation services provided in hotels and similar establishments which are not directly used for that accommodation is not in breach of EU law. Those rules must, however, be applied to concrete and specific aspects of the categories of accommodation services referred to in point (12) of Annex III of the VAT Directive and ensure that the principle of fiscal neutrality is preserved.
In a most recently published decision, the Supreme Tax Court commented on the VAT situation regarding membership fees for non-profit sports clubs and held that they may be subject to VAT. However, it must be verified whether the sports club provides its members with a single service or several separate services, and whether this constitutes a tax-exempt transaction or one subject to VAT.
In a recently published decision, the Supreme Tax Court commented on the issue of recognizing prior ownership periods in the case of a qualified share exchange during the year with respect to the relief for dividends on qualifying holdings (trade tax intercompany dividend privilege). The court rejected a deduction of the dividend from the trade tax basis because the cut-off date “at the beginning of the period of levy” applicable under Section 9 (2a) TTA was not met since the plaintiff did not yet hold an interest in V GmbH at the beginning of the assessment period.
