Tax & Legal

If the founder of an Anglo-American trust, validly established under Guernsey law, has not reserved any powers of control that would allow him to continue to freely dispose of the assets held in the trust, the assets concerned are legally considered to be independent (intransparent) and are not part of the founder's inheritance (legacy) upon his death. Inheritance tax is therefore not payable in such cases, the Tax Court of the state of Schleswig-Holstein said in a final decision.

The tax court of Muenster decided that the income from a dissolution of two US trusts be taxed as investment income in the hands of the beneficiary, except for income which accrued prior to 9 December 2010 (by protection of legitimate expectations).

The Supreme Tax Court decided in the specific case of a Contractual Trust Arrangement that a fiduciary relationship within the meaning of Section 39 (2) No. 1 Sentence 2 of the German Fiscal Code which is recognized for tax purposes may still exist after insolvency proceedings were initiated over the assets of the trustor.

The Regional Tax Court of Munich rendered its final decision in the case of the College Pension Plan of British Columbia which is a pension fund in the legal form of a trust under Canadian law. The court held that the pension fund is not entitled to relief from withholding tax on dividends from domestic portfolio holdings. The court saw no violation of the free movement of capital. This judgment was preceded by a decision of the European Court of Justice (ECJ) as a result of a preliminary request submitted by the Munich tax court.