Tax & Legal

The European Court of Justice decided today that the Commission must pay interest on fines it has unduly imposed in competition matters and which it has provisionally collected. That interest is intended to compensate, at a standard rate, the undertaking concerned for the loss of the amount in question.

The Federal Ministry of Finance published a draft bill dated 14 February 2022, regulating the statutory interest rate for interest on tax arrears and tax refunds.

In a dispute between Germany and Austria on the right of taxation of payments from registered certificates the ECJ held that such interest should be taxed only in the country of residence of the beneficial owner unless such debt-claims explicitly provide the creditor with a participation in the debtor’s profits.

The Supreme Tax Court has held that the €100.000 de minimis exclusion from the trade tax add-back for interest applies to positive amounts only.

The Supreme Tax Court has held that the interest due to a taxpayer on an overpayment levied in breach of community law runs from the date of the payment, rather than from the date of the suit.

The Constitutional Court has rejected for lack of prospects for success a case claiming that the future income tax due from the heir on interest earned but not yet due on the date of death of the testator be deducted from the inheritance tax base as a charge on the estate.

The Supreme Tax Court has held that a taxpayer cannot claim forgiveness of the interest due on the tax payment following a transfer pricing adjustment on the grounds that an associated company had no claim for interest receivable on the corresponding adjustment in its home country.

The ECJ has held that a decision by the tax office to base the recoverable input tax of a bank on the portion of taxable leasing turnover reflecting the interest only is acceptable if it better reflects the actual use made of the inputs.

The Supreme Tax Court has held that interest received on a tax refund due is taxable income despite the non-deductibility of interest payable on an outstanding liability.

The Supreme Tax Court has held that charges for factoring are fully subject to standard rate VAT as a service, even if an interest element is shown separately on the invoice.

In 2010 the Supreme Tax Court changed its position and ruled that interest on refunds of non-deductible taxes to be tax-free. In the meantime the court has again been invited to decide whether the subsequent retroactive change in law by the German tax administration to restore the old situation is in line with the constitution.

The Supreme Tax Court has held that the hedge costs on a foreign currency loan are to be deducted from the interest received in calculating the net foreign income as the basis for the foreign tax credit available.

An ECJ advocated general has suggested the court rule that the German trade tax interest disallowance is not a "withholding tax" banned by the Interest and Royalties Directive.

The Supreme Tax Court has held that the interest income of a German-owned limited partnership in England is taxable in Germany as interest, and not exempt as trading income. The capital gain on the sale of the property is not exempt as taxable in the UK, merely because of the capital allowance claw-back.