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Tax & Legal

UPDATE: Bundestag approves Tax Haven Defence Act


On 10 June 2021, the Bundestag approved the “Act to avert tax avoidance and unfair tax competition and to amend other laws”. In doing so, the Bundestag followed the recommendation of the Finance Committee.

The defence mechanisms contained in the bill (19/28901) are intended to make it more difficult for individuals and companies to avoid paying taxes in Germany through business relations with states and territories that are on the EU list of non-cooperative tax jurisdictions. The measures envisaged include, for example, the denial of tax benefits or deductions.

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New decree by Federal Ministry of Finance extends motive test for escape from CFC taxation to third country situations


On 17 March 2021, the German Federal Ministry of Finance (BMF) published a decree on the application of Section 8 (2) of the Foreign Tax Act (AStG) which stipulates the “motive test” taxpayers have to meet to escape controlled foreign company (CFC) taxation. Continue reading

UPDATE : Bundestag passes the Act to Modernise the Relief of Withholding Taxes and the Certification of Capital Gains Tax


On 5 May 2021, the Bundestag passed the Act to Modernise the Relief of Withholding Taxes and the Certification of Capital Gains Tax. The law as passed is based on the resolution recommended and passed by the Bundestag Finance Committee on 21 April 2021.

The approval of the Bundesrat is still pending. The appointed date for this is 28 May 2021. Continue reading

ECJ: Participation in VAT fraud and refusal of input VAT deduction


The right to deduct input VAT is denied not only if the taxable person himself commits an evasion, but also if he is aware that he participated with his acquisition in a tax evasion. In the latter case the refusal of the input tax deduction is a consequence of the failure to comply with the responsibilities in suspect cases. The taxable person who knew or should have known that he or she was participating in a fraudulent transaction assists the perpetrators of that fraud and becomes an accomplice thereto. The European Court of Justice (ECJ) confirms its previous case law on this issue. Continue reading

Newsflash: TP Perspective on Act to Modernize the Relief from Withholding Taxes and the Certification of Capital Gains Tax)


On May 7, 2021, the German Parliament (Bundestag) adopted the “Gesetz zur Modernisierung der Entlastung von Abzugsteuern und der Bescheinigung von Kapitalertragsteuer – AbzStEntlModG” (Act to Modernize the Relief from Withholding Taxes and the Certification of Capital Gains Tax). The German Federal Council (Bundesrat) passed the Act on May 28, 2021 so that the German legislative process has now been finalized. The Act also contains amendments or supplements to the Foreign Tax Act (AStG) and the General Tax Code (AO) that are relevant from a transfer pricing perspective. Our Newsflash provides an overview of the most important points. Continue reading

Taxation of statutory retirement pensions not unconstitutional – well not yet


Although both of the plaintiffs lost their cases before the Supreme Tax Court, the current ruling has far-reaching consequences for future generations of pensioners, such as those now in their mid-40s. In both of its decisions, the court provided concrete guidelines on how double taxation of pensions must be avoided in the future. Continue reading