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Tax & Legal

Tax & Legal

Ministry of Finance release new form for reporting foreign relationships


The Ministry of Finance has published a new form for reporting foreign relationships according to Section 138 (2) of the General Tax Code (GTC). The new form replaces the form originally included in the Ministry of Finance’s guidelines on the application of Section 138 (2) and Section 138b of the GTC dated 5 February 2018. Continue reading

Newsflash: Supreme Tax Court changes its case law regarding the blocking effect of Art. 9 (1) of the OECD Model Tax Convention


According to the Supreme Tax Court in its ruling of 27 February 2019, published on 15 May 2019, and contrary to its previous case law, Article 9 (1) of the OECD Model Tax Convention, does not prohibit an income adjustment under domestic transfer pricing rules, where the write-off of an unsecured group loan is not recognised as a deduction from taxable profits. Continue reading

Tax exemption on gains from share disposals available to financial undertakings resident in third countries


Gains realised by financial undertakings resident in third countries on the disposal of shares are fully exempt from corporation tax. In these proceedings,the Hessian Tax Court considered whether the exclusion from the benefit of the participation exemption under Section 8b (7) of the Corporation Tax Act also applied to credit institutions and financial services institutions not resident in the EU/EEA. Continue reading

Finance Bill 2019: proposed changes to the real estate transfer tax regulations in the case of so-called shares deals


Following the discussions of the Conference of Finance Ministers of the Federal States, the government has included in the Finance Bill 2019 amended regulations in respect of so-called “share deals” in real estate transactions. Aim of the proposed rules is a tightening of the financial framework around the indirect “transfers” of real estate held through companies and other associations of persons. The draft bill includes the following amendments: Continue reading

Draft Finance Bill 2019: Bill for the Further Tax Stimulation of Electric Mobility and on the Amendment of Further Tax Regulations


On 8 May 2019, the Federal Ministry of Finance published a draft bill for the proposed legislation on the further tax stimulation of electro-mobility and changes to other tax regulations. The proposed Act on the Further Tax Stimulation of Electric Mobility and on the Amendment of Further Tax Regulations provides for measures for to give tax incentives to environmentally friendly mobility, as well as providing amendments to various areas of tax legislation requiring technical adjustments.further The draft also looks to introduce legislation to combat tax structuring schemes and secure tax revenue. Furthermore, the draft bill integrates makes necessary alignements to EU law and case law of the European Court of Justice (ECJ). The draft bill also contains the expected regulations to limit of  the avoidance of real estate transfer tax through so-called share deals. Continue reading

Sky subscription for German football league games may constitute income-generating costs


The Supreme Tax Court has ruled the expenses of a football trainer for a Sky subscription to German football league (“Bundes League”) games may be treated as tax-deductible expenses from self-employed income. The appellant was a full-time trainer of goal keepers working in licensed football. Continue reading

Refinancing by leasing companies: treatment of notional interest portion of leasing instalments


According to a decision of the Supreme Tax Court, the leasing instalments paid in cases of refinancing by a leasing company were also to be included in the calculation of the trade tax base. The bank privilege in the Trade Tax Implementation Ordinance did not apply to the notional interest portion of the leasing instalment. Continue reading

Non-deductible deemed business expenses not to be derived from merger profits within a tax group


If a corporation is merged into its parent company, which in turn is a controlled company within a corporation tax group (fiscal unity/“Organschaft”) with a corporation as the controlling company (“Organträger”), the Supreme Tax Court has ruled that no flat-rate deemed business expenses are to be added back to profits under Section 8b (3) sentence 1 of the German Corporation Tax Act (CTA) either at the level of the parent company or at the level of the controlled company, where the said non-deductible flat-rate deemed business expenses are derived from a merger gain. Continue reading