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Tax & Legal

VAT group: ECJ defines eligibility of partnerships as controlled companies


The ECI held that it is from the outset not compatible with EU-Law if the possibility for a partnership to form a VAT group – in addition to the controlling company – is limited to those partners in the partnership whose business is financially integrated into that of the parent. Such a restriction can only be justified by a specific need to prevent abuse. Continue reading

Determination of the addressee of a tax audit notification order


In order to determine the content of an administrative act, the declared intention of the authority must be taken into account and not the literal meaning of the relevant wording; however, a notice clearly addressed to a specific addressee is not open to interpretation in this respect. This was decided by the Supreme Tax Court in a decision published on 8 April 2021. Continue reading

Successful constitutional complaint against income correction affecting freedom of establishment


The German Constitutional Court overturned a 2019 judgment of the Supreme Tax Court regarding the erstwhile change in its case law on the issue of the income correction with respect to an unsecured group loan because the tax court failed to submit the facts of the case to the European Court of Justice (ECJ) for final clarification and thus violated the complainant’s right to the lawful judge under Article 101(1) of the Constitutional Statute. Continue reading

Taxation of employment income of executive directors and cross-border commuters


In two cases the Supreme Tax Court answered questions raised on the calculation of the “stay away” days (non-return days) of cross-border commuters when returning to their domestic residence from a third-country business trip and of the allocation of  the right of taxation of the employment income of executive directors under the German / Swiss tax treaty. Continue reading

ECJ: Services between head office and foreign branch may be subject to VAT


The ECJ held that services by an EU head office, who is part of a VAT group, to its foreign branch are in general subject to VAT if the cost of such services are charged to the branch. For VAT purposes head office and its branch located in another Member State must be regarded as separate taxable persons. Continue reading