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Tax & Legal

ECJ – Opinion of Advocate General: losses of non-resident permanent establishment


On 17 January 2018 the Advocate General Campos Sánchez-Bordona published an opinion on a referral to the European Court of Justice (ECJ) by the Eastern Regional Court in Denmark. The case relates to the entitlement of a Danish company to set off the final losses of its Finnish permanent establishment (PE) and the compatibility with EU law of Denmark’s “international joint taxation” scheme. Continue reading

Crowdfunding: treatment of donations


The Federal Ministry of Finance published a circular on 15 January 2018 on crowdfunding and the conditions for its deduction as a charitable donation. The circular defines various types of crowdfunding and makes a distinction between classic crowdfunding, donation-based crowdfunding and debt-based crowdfunding (also referred to as peer-to peer lending or crowdlending). Continue reading

Exemption of loss forfeiture for troubled businesses illicit state aid?


The exception of the German loss restriction rules for acquisitions in the course of a rescue operation to save a troubled business was held by the European General Court as a selective measure as it favours certain companies – those in financial difficulties – over their competitors in the marketplace. Two cases were brought to the ECJ for final clarification. The advocate general in one of the cases now proposes that the ECJ overturn the judgment of the General Court to the extent that it dismissed the action as unfounded. Continue reading

US tax reform legislation signed by President Trump


Congress on December 20, 2017 gave final approval to the House and Senate conference committee agreement on tax reform legislation that would lower business and individual tax rates, modernize US international tax rules, and provide the most significant overhaul of the US tax code in more than 30 years. President Trump signed the tax bill on 22 December 2017. Continue reading

ECJ – German Anti-Treaty-Shopping Rule infringes EU law


On 20 December 2017 the European Court of Justice (ECJ) issued its decision on two cases referred to it by the Cologne Tax Court on the compatibility of the anti-abuse rule in Section 50d Income Tax Act (ITA) with EU law. According to Section 50d (3) ITA certain intermediary foreign companies are not entitled to a (full or partial) refund of German withholding tax; without a preceding oral hearing the ECJ took the view that the section was incompatible with both the Parent-Subsidiary Directive and the freedom of establishment. Continue reading

VAT: Divergent treatment of discounts on medicinal products violates EU law


On 20 December 2017 the European Court of Justice (ECJ) held that the divergent VAT treatment of discounts granted by pharmaceutical companies (i.e. trader/entrepreneur for VAT purposes) to statutory (public) health insurance funds and private health insurance funds constitutes an infringement of EU law. The ECJ followed the Advocate General’s opinion and confirmed the doubts of the German Supreme Tax Court which had referred the question to the ECJ under reference V R 42/15. Continue reading

Foreign Tax Act: Income adjustment in accordance with community law?


The Lower Tax Court of Rhineland Palatinate has asked the ECJ to rule on the income adjustment provision of the Foreign Tax Act as amended in 2003 as it might not be in accordance with EU-law. The focus of the judicial review is on the tax consequences of a business relationship with a related party and where the terms do not meet the third party comparison test. The ECJ advocate general has suggested the court decide that the German rules for profit adjustment under Sec. 1 Foreign Tax Act are not in violation of the freedom of establishment. Continue reading