Tax & Legal

In a most current judgment, the Supreme Tax clarified the procedural and substantive handling of a late filing penalty when a VAT assessment is amended to a taxpayer's benefit (surplus) during ongoing litigation.

In a recently published judgment, the Supreme Tax Court decided that contributions made by parents to a support association for their children’s private school may, under certain circumstances, be treated as deductible school tuition for income tax purposes. However, expenses for lodging, care, and meals are not eligible.

In a recently published decision, the Supreme Tax Court held that, when determining a late filing penalty as part of a discretionary measure of the tax authorities pursuant to Section 152 (1) Sentence 1 of the General Tax Code, the frequency of missed deadlines must be taken into account even in cases of refunds.

Payments made by the purchaser of a parcel of real estate to a third party constitute consideration within the meaning of Section 9 (2) Number 3 of the Real Estate Transfer Tax Act only if the third party is in such a powerful legal position to prevent the purchaser from acquiring the property, and the purchaser is aware of these circumstances when making the payment.

In a recent decision, the Supreme Tax Court held that, in the absence of an explicitly prescribed filing deadline, the general statute of limitations comes into play when requesting a withholding tax refund. The implementation of this provision does not constitute a violation of the free movement of capital.

In a most recently published judgment, the Supreme Tax Court decided that freelance professionals who voluntarily keep accounts and draw up annual stock inventories cannot determine their VAT payable by using the so-called cash method (at the time remuneration is received) rather than on the basis of the agreed remuneration (as invoiced).

If a civil service pension is split internally under the Pension Equalization Act, the tax-free allowance for pension income and also the additional allowance must be calculated for the person eligible for equalization in the year in which the claim arose, i. e., the year in which that person first was entitled to receive the pension. With its decision, the Supreme Tax Court confirmed the opinion of the Federal Ministry of Finance (BMF) published in October 2013.

Under Section 13 (1) No. 4c of the Inheritance Tax and Gift Tax Act a family home may be transferred tax-free from a parent to a child upon the parent’s death if the parent lived there personally prior to death, the child moves in immediately after the death, and the living area does not exceed 200 square meters. According to the Supreme Tax Court, even a jointly used garden and associated pathways may be eligible for tax exemption.

In a decision on 24 June 2026 and published on 20 August 2026, the German Supreme Tax Court addressed the tension between domestic tax law rules on hidden profit distributions and international tax treaty protections under the Germany-Cyprus Double Taxation Agreement (DBA) 2011.

The daily allowance paid under the Swiss statutory accident insurance is a tax-exempt benefit comparable to sick pay under Book Five of the Social Code and is therefore subject to the progression proviso for taxpayers with unlimited tax liability pursuant to Section 32b (1) Sentence 1 Number 1 Lett. K of the Income Tax Act. This was decided by the Supreme Tax Court in a most recent judgment.

If a partner leaves the partnership, his or her share of the trading loss ceases to exist. A legal successor who assumes the partner’s share cannot utilize this portion of the loss due to a lack of entrepreneurial identity. The reason for the withdrawal is irrelevant, the Supreme Tax Court said in a most recently published decision.

Beneficiaries of a bequest may also claim the lump-sum deduction for estate-related expenses under Section 10 (5) Number 3 Sentence 2 of the Inheritance and Gift Tax Act. According to a most recently published decision of the Supreme Tax Court, this lump-sum allowance must not be reduced if the inheritance received by the other heirs is not subject to German taxation.

To the extent that the minimum tax results in definitive taxation resulting from an ‘inverse accounting effect’, equitable relief measures under Section 163 of the General Tax Code should be given serious consideration, the Supreme Tax Court said in a most recently published decision.

The Supreme Tax Court addressed the VAT treatment of an agreement between a temporary employment agency (the lender) and the client regarding the use of cafeterias by the temporary workers. The agreements - which were set forth in a single uniform contract - do not give rise to taxable services provided for consideration.

In a most recent judgment, the Supreme Tax Court decided that it is not possible to demonstrate that a co-ownership in a plot of land valued at the proven lower fair market value is worth less than the calculated share of the fair market value of the entire plot.

In a recently published ruling, the Supreme Tax Court has referred a question to the Court of Justice of the European Union (CJEU) for a preliminary ruling on whether a remotely controlled technical drying plant located in Germany constitutes a ‘fixed establishment’ within the meaning of the VAT System Directive, where the operator does not employ its own staff and subcontractors are instead working on site.

In most recent decision, the Supreme Tax Court held that there are no special circumstances that would allow for a retroactive determination of a carryover of donations in the year the donation was made if the correct application was not filed. However, without a separate determination, it is no longer possible to utilize the carryover in the following nine tax assessment years.

In a recently published decision, the Supreme Tax Court decided that an heir’s challenge to the receipt of a tax assessment notice, in his or her capacity as legal successor, can only disrupt the presumption of notification laid down in Section 122 (2) Number 1 of the General Tax Code if there are credible facts that raise specific and well-founded doubts regarding the circumstances of receipt.

In a recently published judgment, the Supreme Tax Court decided that the disallowance to deduct special business expenses under Section 4i Sentence 1 of the German Income Tax Act for partnerships with foreign partners may also apply to cases of Dutch group taxation. Furthermore, it is not only important whether a formal deduction for business expenses is made abroad, but also whether the expenses economically reduce the taxable income abroad.

In a recent judgment, the Supreme Tax Court decided that, for a sub-participation of a share in a corporation - whether in the form of a typical or atypical sub-participation - the tax assessment basis is not to be determined separately and uniformly.