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Tax & Legal

Tax & Legal

Federal Finance Ministry circular on the tax treatment of salaries for tax treaty purposes is updated.


The Federal Finance Ministry circular of 12 November 2014 on the taxation of salaries for tax treaty purposes has been revised by a committee made up of from both the Federal and the States’ governments. The new version recognises OECD developments as well as recent case law and relevant changes in the legislation. Continue reading

Federal Ministry of Finance amends earlier circular on treaty-shopping rules


On 20 December 2017 the European Court of Justice (ECJ) took the view that Section 50d (3) Income Tax Act prohibiting certain intermediary foreign companies from (full or partial) refund of German withholding tax was incompatible with both the Parent-Subsidiary Directive and the freedom of establishment. The German Tax Authorities have recently issued a circular on its application of the rules. Continue reading

Crowdfunding: treatment of donations


The Federal Ministry of Finance published a circular on 15 January 2018 on crowdfunding and the conditions for its deduction as a charitable donation. The circular defines various types of crowdfunding and makes a distinction between classic crowdfunding, donation-based crowdfunding and debt-based crowdfunding (also referred to as peer-to peer lending or crowdlending). Continue reading

Ministry of Finance clarifies questions on the Investment Tax Act 2018


In a circular published on 24 November 2017 the Federal Ministry of Finance clarified a number of urgent questions raised by the German Banking Industry Committee and the Federal Association of Investment and Asset Management with regard the application of the Investment Tax Act in the version applicable from 1 January 2018. Continue reading

Limited taxpayers: withholding tax on cross-border licensing of software


At the beginning of November 2017 the Federal Finance Ministry published the long-awaited circular on its intended application of the rules (Section 50a Income Tax Act)applying to limited taxpayers and withholding tax on cross-border licensing of software and databanks. Continue reading

Bundesrat reacts positively to exchange of information for tax-saving schemes


At its sitting on 22 September 2017 the Bundesrat (Federal Council/upper house) expressly welcomed the proposal for an amendment of Council Directive 2011/16/EU on administrative cooperation in the field of taxation to impose a reporting obligation on cross-border schemes. It has long been a demand of the Bundesrat that rules on reporting obligations be introduced. Continue reading

Country-by-Country Reports: German Ministry of Finance releases circular.


On 20 December 2016 legislation was passed introducing measures to combat base erosion and profit shifting. A part of this legislation – introduced in the new Section 138a of the General Tax Code – imposed an obligation on multinational enterprises to report annually for each tax jurisdiction in which they do business, so-called Country-by-Country (CbC) reports. On 11 July 2017 the German Ministry of Finance released a circular, which provides some guidelines on the completion of the CbC reports. Continue reading