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Tax & Legal

Publication: Key Tax Issues at Year End for Real Estate Investors 2020/2021


International tax regimes are diverse, complex and variant, and are usually full of fixed dates, terms and deadlines. These dates, terms and deadlines need to be observed carefully in order to avoid penalties and to receive certain tax reliefs or exemptions. At year end these obligations become even more difficult to understand and fulfil, particularly for real estate investors with investments in numerous countries. Continue reading

No VAT exemption for heat supplies provided by homeowners’ association


The European Court of Justice (ECJ) held that the supply of heat by a homeowners’ association to its members, the residential property owners, is subject to VAT. Accordingly, the proportionate input VAT allocable to the acquisition and operation costs of the heat generating power plant will be deductible. The case was referred to the ECJ by the Lower Tax Court of Baden-Wuerttemberg. Continue reading

ECJ: No automatic VAT-exemption for sports related services of non-profit organizations


The ECJ held that Article 132(1)(m) of Council Directive 2006/112/EC exempting ‘the supply of certain services closely linked to the practice of sport or physical education’ is not being of direct effect and cannot be directly invoked before the national (local) courts. It is for the national court to determine in detail what kind of services provided by sports clubs are exempt from VAT. Continue reading

RETT: Change of shareholders in real estate partnership


The Supreme Tax Court has granted a taxpayer’s appeal against a real estate transfer tax assessment on the grounds that an indirect change in the shareholdings in the members of a real estate partnership was less than a complete change of interest in the partnership. With its decision the court has confirmed its case law regarding share transactions made prior to the enactment of the Tax Amendment Act 2015. Continue reading

Germany: Higher penalties for organized tax evasion?


The representatives of the German provinces (the upper chamber of parliament – Bundesrat) would like higher penalties for organized tax evasion and further suggest improving the investigation of such crimes. On 27 November 2020 the upper chamber decided to introduce a corresponding bill in the German Bundestag to amend the German Fiscal Code. Continue reading

Retroactive financial integration in case of change in shareholding during the year?


A continuous and retroactive financial integration is also possible where a change in shareholder takes place during the year. The Lower Tax Court of Duesseldorf held that a fiscal unity or tax consolidation group for corporation income tax may be established already for the whole year in which the exchange of shares took place. In its judgement the court disagrees with the tax authorities’ official opinion on this issue. The Supreme Tax Court is now in charge and must finally decide the dispute.
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ECJ: Complaint for rejection of VAT refund applications by foreign companies upheld


The European Court of Justice (ECJ) upheld an action for breach of contract brought by the EU Commission against Germany in two of three claims. Germany had violated EU law insofar as it systematically refuses to request the information missing in an application for a VAT refund of foreign taxpayers and instead immediately refuses the refund applications in such cases if such information can be provided only after the 30 September deadline. Continue reading

Fair and effective taxation: Council of the European Union adopts conclusions


EU member states want to ensure that EU tax policy remains fit for purpose and results in fair and effective taxation in the increasingly globalised and digitalised economy of the 21st century. Therefore, the European Council approved conclusions setting out its comprehensive assessment of the main tax policy issues to be addressed over the coming years, to shape the EU policy agenda in the field of taxation. Continue reading

Tax & Legal Newsflash – Draft law on the modernization of the relief from and the certification of withholding taxes


On 20 November 2020, the Federal Ministry of Finance published a draft bill on the modernization of the relief from and the certification of withholding taxes. The amendments relate, among other things, to the withholding and refund procedure, the anti-treaty shopping regulations and the provisions on non-resident taxation for income arising from licensing or the disposal of rights which are entered in a domestic public register.
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