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Tax & Legal

Tax & Legal

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

No taxation of bogus income from a Ponzi scheme in the case of tax withheld by fraudster


In a recent ruling, the Supreme Tax Court held that the deemed settlement of final withholding tax under Section 43 (5) Sentence 1, Half-Sentence 1 Income Tax Act (ITA) also applies if the tax has been withheld by the debtor (payer) of the investment income, but not declared and paid over to the tax office. As a result, investment income from a fraudulent pyramid scheme is in principle no longer to be included in the income tax base. Continue reading

Unutilised maintenance expenses deductible under Para. 82b  of the Income Tax Implementation Regulations fully deductible upon death


The Supreme Tax Court decided that where a taxpayer decides to set off major maintenance expenses over a period of several years in accordance with Para. 82b  of the Income Tax Implementation Regulations (‚ÄúEStDV‚ÄĚ) but dies before the full amount has been deducted, that part of the maintenance expenses not yet set off can be deducted as a rental income expense in the year of assessment in which the death occurred. This finding is at variance with Income Tax Guideline No. 21.1 Para. 6 Sentences 2 and 3 Income Tax Guidelines 2012 (EStR 2012) Continue reading

Determination of the addressee of a tax audit notification order


In order to determine the content of an administrative act, the declared intention of the authority must be taken into account and not the literal meaning of the relevant wording; however, a notice clearly addressed to a specific addressee is not open to interpretation in this respect. This was decided by the Supreme Tax Court in a decision published on 8 April 2021. Continue reading

Tax loss of value of shares following the opening of insolvency proceedings


If the shareholder’s right of membership in a domestic stock corporation (AG) lapses because the AG is dissolved, wound up and deleted from the register as a result of insolvency, the shareholder incurs a taxable loss if he does not receive his contribution back in full or in part. If such shares are deleted from the shareholder’s securities account by the custodian bank before the AG is removed from the register, the loss will be considered to arise at the time of the deletion by the custodian bank. However, a loss cannot already be assumed to have arisen at the point when a distribution of assets can no longer be objectively expected as part of the final distribution of the assets of the AG or when the listing of the shares on the stock exchange is discontinued or their listing is revoked.  This was the judgment (VIII R 20/18) of the Supreme Tax Court on November 17 2020 and published on 11 March 2021. Continue reading