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.
The ECJ has held that a non-resident taxpayer must be able to deduct an annuity paid in consideration for a business interest on the same lines as a resident.
The finance ministry has decreed that a Supreme Tax Court ruling allowing a taxpayer a deduction for the costs of pursuing a civil claim for damages should not be followed as a precedent for other cases.
