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Tax & Legal

Tax & Legal

Referral to European Court of Justice: VAT exemption for the development and brokerage of insurance products


Does an insurance broker, who makes- in addition to his brokerage activities -a brokered insurance product available to an insurance company, provide VAT-exempt services? The Supreme Tax Court considered this doubtful and decided on 5 September 2019 ( V R 58/17), to refer the question to the Court of Justice of the European Union (ECJ) for a preliminary ruling.  Continue reading

Proof of VAT-exempt intra-Community supplies


For the purposes of establishing whether an VAT-exempt intra-Community supply had been made, where other evidence exists establishing that the motor vehicles had been sent to their destination in the other EU country, the assumption of the absence of documentary evidence could not contradict such other evidence.

The proof of the customer’s entrepreneurial status resulting from the VAT ID number cannot be refuted by the mere assumption of a letterbox address. Continue reading

Inheritance Tax: spousal residence exemption


According to the Supreme Tax Court in its judgment of 11 July 2019 – (II R 38/16), published on 28 November 2019, the inheritance tax exemption on the inheritance a family home by the surviving spouse or civil partner will not apply retroactively where the surviving spouse/partner transfers ownership of the family home to a third party within ten years of acquisition. This will also be the case where the surviving spouse/partner continues to use the home for residential purposes under the terms of a lifetime interest. 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

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

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

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

Extended trade tax deduction also possible for shareholdings in real estate management companies


Under the extended trade tax deduction, rental income derived by entities whose activities are limited to the administration of their own real property is deductible from the trading income subject to trade tax. The Grand Senate of the Supreme Tax Court held that this trade tax deduction is also available for a commercial GmbH & Co. KG with respect to its interest in a pure asset-management civil law partnership. Continue reading