The publication of the decision of the European Court for Justice (ECJ) in the Hornbach-Baumarkt case is scheduled for 31 May 2018. The case revolves around the question whether Section 1 of the Foreign Transaction Tax Act (“FTTA” – in the version in force in 2003) violates the freedom of establishment. The section in question calls for income corrections to be made on related party transactions which are not considered to have been concluded at arm’s length. Continue reading
Tax & Legal
In its sitting on 25 May 2018, the ECOFIN council formally accepted the Directive to amend the Mutual Assistance Directive 2011/16/EU to provide for the mandatory exchange of information in the area of taxation for reportable cross-border arrangements. ECOFIN had already reached a political agreement on the planned reporting obligation for cross-border tax arrangements at its plenum on 13 March 2018. Continue reading
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
A limited tax liability on payments by the German State pension fund to a resident of Canada is not nullified by the tax treaty. The Supreme Tax Court took the view that in such a case Germany held a competing right to tax. Continue reading
The Supreme Tax Court has serious doubts as to the appropriateness of the current fixed rate of interest on late payments which is levied at a rate of 6 per cent per annum. This is especially relevant when considering the generally low interest rates level which have been charged in the market for some considerable time. Continue reading
Where an employer contractually obliges himself to make several payments to an employee in connection with a termination of employment, the payments will only be considered as a single uniform compensation payment if there is clear evidence that all instalments were paid “as compensation for lost income or expected loss of income”. Continue reading
The Lower Tax Court of Hamburg has granted a suspension of payment request because of doubts whether the loss forfeiture rules for companies where more than 50% of the shares in the loss making company are transferred are compatible with the German constitution. Continue reading
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
The April edition includes news on two decisions of the German Constitutional Court, on the EU finance ministers’ agreement on rules of mandatory disclosure for intermediaries and the European Commission’s proposal on new rules for the taxation of the digital economy. Continue reading
In a decision on 10 April 2018, the German Constitutional Court concluded that the complaint that the trade tax treatment of gains from the disposal of partnership interests was unconstitutional because it contravened the principle of equality was not justified. Continue reading