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Tax & Legal

Response of tax authorities to European Court of Justice’s decision on the “activity requirement” for trade tax exemptions on dividends from third countries


The tax authorities of the Federal States have issued a joint response to the ECJ’s decision in EV (C-685/16) on 20 September 2018, in which the Court decided that the “activity requirement,” contained in the rule providing for a trade tax exemption on distributions from third countries contravened EU law. Continue reading

Free movement of capital in cases of shareholdings of at least 10%


In its judgement of 24 July 2018, published on 30 January 2019, the Supreme Tax Court held that with regard to national provisions with a requirement of a minimum shareholding of at least 10%, the principle of the free movement of capital is not blocked by the principle of freedom of establishment. Whilst the judgement specifically related to a legal provision, which is no longer applicable, it represents a departure by the Supreme Tax Court from its previous view on this issue. Continue reading

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