On 8 November 2018, the Finance Bill 2018 was adopted by the German parliament and received the consent of the Bundesrat on 23 November 2018 in the form of “The Act for the Avoidance of VAT Losses on the Trading of Goods on the Internet and Amendments to other Tax Regulations”(hereafter “Finance Act 2018”). This article sets out a selection of the new regulations. Continue reading
Tax & Legal
Pending introduction of the new VAT system, four short-term ‘quick fixes’ will be made regarding the VAT aspects of trade between the member states. Discussions are ongoing on a definitive VAT system to replace the current ‘transitional’ VAT arrangements, which have been applied since 1993. Continue reading
On 20 September 2018, the European Court of Justice held that the “activity clause” in the German trade tax act for third country sourced dividends is contrary to the free movement of capital (Art. 63 of the Treaty on the Functioning of the EU – TFEU). Continue reading
The ECJ overturned an earlier judgment of the European General Court and held that the German tax legislation concerning the possibility of a loss-carry forward to future tax years despite a harmful share acquisition in cases of a rescue plan to save the company from insolvency – known as the salvage clause – is not illegitimate state. Continue reading
On 25 June 2018, the European Court of Justice published its decision of 14 June 2018 concerning the current version of the German anti-treaty /anti-directive shopping legislation. Again, the ECJ found that the provision both contravened the Parent/Subsidiary Directive and constituted a restriction of the freedom of establishment. Continue reading
Some of the topics in this issue: Administration amends circular on treaty-shopping rules, Pensions paid abroad subject to limited tax liability, ECJ – Denmark to set-off final losses of foreign EU-branch. Continue reading
A Danish company may set off the final losses of its foreign EU-permanent establishment against its own taxable income, provided it can prove that the losses incurred are final and the company has exhausted the possibilities to deduct those losses in that Member State. Continue reading
For the purposes of input VAT deduction, the necessary information about the tax point (the date of the supply) may be inferred from the date on which an invoice was issued, if it can be assumed that the service was provided in the month in which invoice was issued. The Supreme Tax Court also confirmed European Court of Justice case law, according to which a retroactive adjustment of the invoice reverts to the year of its issue. Continue reading
The European Court of Justice held that the German CFC regulations – as such – do not generally pose a restriction on the freedom of establishment. It is up to the referring court, however, to decide whether the legislation did in fact give the taxpayer the chance to prove that the terms were agreed on for commercial reasons resulting from its status as a shareholder of the non-resident company.
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The second half of May 2018 saw updates to the OECD Harmful Tax Practices – 2017 Progress Report on Preferential Regimes and to the EU’s list of non-cooperative tax jurisdictions. Continue reading