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Tax & Legal

Waiver of exit tax upon return to Germany


According to Section 6 (1) of the Foreign Taxes Act (FTA), where a taxpayer’s unlimited tax liability ceases through the taxpayer giving up his German residence/habitual abode, any material shareholdings held in his private property will be deemed as disposed of even without a sale and any capital gain on the deemed disposal will be taxable under Section 17 (1) of the Income Tax Act (ITA). Section 6 (3) FTA provides for this so-called exit tax to be subsequently waived in certain circumstances. The Münster Tax Court held that in addition to the (objective) re-establishment of the unlimited tax liability (i.e. the re-establishment of the German residence/habitual abode), it was also necessary for the taxpayer to provide credible evidence that the will to return existed (subjectively) upon departure. Continue reading

New Finance Ministry circular on standards for the proper keeping and storage of books, records and documents in electronic form and for data access


On 28 November 2019 the Federal Ministry of Finance (MoF) issued a revised circular on standards for the proper keeping and storage of books, records and documents in electronic form and for data access (here “GoBD”) – ( IV A 4 – S 0316/19/10003 :001 (2019/0962810). Continue reading

Bundesrat approves Finance Act 2019


In its plenary session last Friday, the Bundesrat approved the Act on the Further Tax Promotion of Electric Mobility and the Amendment of Further Tax Regulations (“Finance Act 2019”) Continue reading

Inheritance Tax: spousal residence exemption


According to the Supreme Tax Court in its judgment of 11 July 2019 – (II R 38/16), published on 28 November 2019, the inheritance tax exemption on the inheritance a family home by the surviving spouse or civil partner will not apply retroactively where the surviving spouse/partner transfers ownership of the family home to a third party within ten years of acquisition. This will also be the case where the surviving spouse/partner continues to use the home for residential purposes under the terms of a lifetime interest. Continue reading

Bundestag approve Finance Act 2019


On 7 November 2019, the Bundestag approved the Act on the Further Tax Promotion of Electric Mobility and the Amendment of Further Tax Regulations (Finance Act 2019 – “FA19”) in the version recommended by the Finance Committee of the Bundestag. In its recommendation, the Finance Committee included a number of the Bundesrat’s regulatory proposals. Continue reading

No trade tax add-back for letting of hotel rooms to tour operators


According to the Supreme Tax Court in its ruling of 25 July 2019 (III R 22/16), published on 7 November 2019, fees paid by a tour operator to hoteliers for the provision of hotel rooms are not subject to the trade tax add-back. Under Section 8 No. 1 Letters d and e of the Trade Tax Act, rental and leasing payments made for the use of moveable and immoveable assets which have previously been deducted from the income tax/corporation tax base, are to be partially added back to trade tax base, where the asset would be treated as an asset in the balance sheet of the taxpayer, if he actually owned the asset. Continue reading