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Tax & Legal

Trade tax: Dividend income exemption in case of double residence


According to the Lower Tax Court of Hesse, the dividend income exemption for trade tax on qualifying shareholdings is also available for distributions of companies of foreign legal form – provided the foreign company is comparable to a German corporation, has its place of management and thus a permanent establishment in Germany. Continue reading

Distinction between the interruption of a business and its termination


In its judgment of 18 July 2018 published on 23 July 2019, the Supreme Tax Court decided that, where – looking at the situation from an objective point of view – it would be possible for the taxpayer to continue his business, it should be considered as interrupted rather than terminated. Furthermore, the Court held that the taxpayer could not submit a termination declaration and retain the business infrastructure without making any significant changes. Continue reading

Final loss utilization by parent company in case of merger and liquidation of a second-tier subsidiary?


The European Court of Justice will have to decide once again on the justification of the non-deductibility of ‘final losses’ in the foreseeable future. In two Swedish cases the Advocate General has formulated her opinion and is not convinced of a “finality” or cross-border loss utilisation due to the particularities of the cases. Continue reading

Catering costs on film set not fully deductible as business expenses


Only 70 per cent of the costs incurred by a film production company for meals and drinks distributed free of charge to the persons employed at the film location for the production of the recordings can be deducted as business expenses, provided that the meals and drinks are also distributed to those persons who are not employees of the company itself, but who, for example, participate in the production of the set as employees of the participating television stations. Continue reading

European Court of Justice: Information to be provided by applicants for authorised economic status under the Union Customs Code


In its judgement of 16 January 2019, the European Court of Justice (ECJ) held that the information required by the customs authorities from legal persons applying for authorised economic status (AEO) under the Union Customs Code – in particular the tax identification numbers and the name of the responsible tax offices of certain employees of the applicant – was lawful within the ambit of Directive 95/46/EC and Regulation (EU) 2016/679 governing the protection of individuals with regard to the processing of personal data and on the free movement of such data. The gathering of information was limited, however, to information on individuals who were in charge of the applicant, or who exercised control over its management and to those who were in charge of the applicant’s customs matters. Continue reading

Double tax treaties: recognition of losses from a Belgian permanent establishment.


Section 50d (9) Income Tax Act (ITA) excludes a tax exemption in Germany under a double tax treaty where, inter alia, the income is not taxed in the other treaty state. In a decision of the Supreme Tax Court published on 19 December 2018, the Court held that the term “income” in this context applied to both positive and negative income. Thus, provided that the other conditions set out in Section 50d (9) have been met, losses, which were originally excluded as tax-free treaty income, could, be deducted from domestic taxable income, regardless of the treaty. Continue reading