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Tax & Legal

Tax & Legal

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

Climate Protection Progamme 2030 – changes in tax law


On 25 October 2019, the German Bundestag discussed the implementation of the climate protection programme 2030 into tax law. This was followed by a public hearing on 6 November 2019.

The bill for the implementation of the climate protection programme 2030 in tax law had been adopted by the Federal Government on 16 October 2019.

The amendments to the law will initiate tax measures designed to support climate protection in the areas of transport, housing and energy generation. Continue reading

CFC rules considered to be in line with EU law


Following a ruling by the European Court of Justice (ECJ) earlier this year, the Supreme Tax Court held in its decision of 31 October 2019 that the incorporation into the tax base of controlled company income from invested capital from an intermediary company domiciled in Switzerland in the financial year 2006 may restrict the free movement of capital, but it is justified through compelling reasons of public interest and does not therefore contravene EU law. Continue reading

Finance Bill 2019 gets green light from Federal Cabinet


On 31 July, the Federal Cabinet adopted a draft Finance Bill 2019 referred to as the “Act on the Further Tax Promotion of Electric Mobility and on the Amendment of Further Tax Regulations”. As its name suggests the bill focuses on tax incentives for electro-mobility but includes legislation in numerous other areas of tax law. Continue reading

Restrictions to the “tainting effect” of trading partnership income for trade tax purposes


For income tax purposes, income of a partnership from leasing and letting or from capital assets is to be reclassified as trading income where the partnership also receives a negligible amount of income from a participation in a trading partnership; however, such “tainted” income is not subject to trade tax. This was decided by the Supreme Tax Court in its ruling of 6 June 2019, published on 1 August 2019. Continue reading

European Court of Justice: Final Losses


The European Court of Justice held in its decision Memira Holding AB issued on 19 June 2019 that when assessing whether the losses of a non-resident subsidiary are final within the meaning of its judgment in Marks & Spencer on 13 December 2005 (C446/03), the fact that, in the event of a merger, the subsidiarys Member State of establishment does not does not allow the losses of one company to be transferred to another company liable for corporation tax, is not decisive, unless the parent company can demonstrate that it is impossible for it to deduct those losses through ensuring that – in particular by means of a sale- the losses are fiscally taken into account by a third party for future tax periods. Continue reading

Locker can constitute a fixed place of business for double tax treaty purposes


The Supreme Tax Court refused to overturn the tax court’s decision to refuse leave to appeal, agreeing with the lower court that a locker can constitute a fixed place of business within the meaning of Article XI Paragraph 1 of the German/British double tax treaty. Continue reading