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Tax & Legal

Tax & Legal Newsflash – German draft bill on the modernization of the withholding tax relief procedure


On January 20, 2021, the German Government adopted the draft bill on the modernization of the relief from withholding taxes and the certification of withholding tax paid (“Abzugsteuerentlastungsmodernisierungsgesetz; AbzStEntModG). The draft bill includes changes to the withholding tax and relief procedure and an adjustment of the German anti-treaty-shopping rules. However, the envisaged retroactive abolishment of the German sourcing rules for licenses and IP sales transactions based on the mere registration of underlying rights in a German register was dropped. The approval of the bill by the German Government is the first step of the legislative process so further changes of the draft bill may occur and need to be monitored. Continue reading

Italy reshapes format, contents and requirements for transfer pricing documentation


In brief

The Italian Revenue Agency on November 23 issued the long-awaited Act of the Director of the Revenue Agency no. 360494 (New Act). The New Act introduces significant and substantial changes to the rules related to the ‘appropriate’ Transfer Pricing documentation that must be prepared in order to support the application of the arm’s-length principle to intercompany transactions, and hence establishes the new requirements for opting-in the Italian penalty protection regime. Continue reading

Review of profit and loss pooling agreements concluded prior to 27 February 2013 recommended


An amendment to a statutory law which was passed by the Bundestag and Bundesrat in December 2020, entered into force on 1 January 2021, requires a review of those profit and loss pooling agreements concluded and last amended before 27 February 2013. This pertains to profit and loss pooling agreements (PLPA) for tax groups (“Organschaft”) with a GmbH as controlled subsidiary and which do not (yet) contain an explicit and unconditional reference to Section 302 of the German Stock Corporation Act (GSCA) which includes future changes of the provision (so-called “dynamic reference”).
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Medical telephone consultations through „health coaches” exempt from VAT


Telephone advisory services provided by a company on behalf of state health insurance funds through so-called “health coaches” may be exempt from VAT under Article 132 (1) of the VAT Directive as “medical treatment in the field of human medicine”, if the consultations have a therapeutic purpose. This was the conclusion of the ECJ following on a request for a preliminary ruling brought by the Supreme Tax Court. The latter has now issued its subsequent (follow-up) decision and referred the case back to the Lower Tax Court for further fact finding. Continue reading

No option for full tax assessment by U.S. citizen living in the EU


According to a judgment of the Supreme Tax Court, a U.S. citizen with limited tax liability in Germany is not entitled to the right of full tax assessment for income from employment even if he lives in an EU or EEA state (here: the Netherlands). The non-discrimination clause in Article 24 of the German/US double tax treaty does not give rise to a claim to equal treatment with a German national with limited tax liability. Continue reading

ECJ: Request for VAT refund valid even in absence of serial number


Following on a request for a preliminary ruling brought by the Supreme Tax Court, the European Court of Justice held that the application form for a VAT refund does not necessarily have to show a serial invoice number. It is sufficient to indicate another number which can be used to identify the invoice and thus the item or service in question. Continue reading

Publication: Key Tax Issues at Year End for Real Estate Investors 2020/2021


International tax regimes are diverse, complex and variant, and are usually full of fixed dates, terms and deadlines. These dates, terms and deadlines need to be observed carefully in order to avoid penalties and to receive certain tax reliefs or exemptions. At year end these obligations become even more difficult to understand and fulfil, particularly for real estate investors with investments in numerous countries. Continue reading

No VAT exemption for heat supplies provided by homeowners’ association


The European Court of Justice (ECJ) held that the supply of heat by a homeowners’ association to its members, the residential property owners, is subject to VAT. Accordingly, the proportionate input VAT allocable to the acquisition and operation costs of the heat generating power plant will be deductible. The case was referred to the ECJ by the Lower Tax Court of Baden-Wuerttemberg. Continue reading