In this issue: Official Pronouncements, Supreme Tax Court Cases, From Europe and From PwC. Continue reading
Tax & Legal
The Supreme Tax Court has followed an ECJ judgment in basing the maximum foreign tax credit on the total German tax payable on the foreign income as calculated under the assumption that personal allowances and reliefs are first set against the domestic income. The court also held the “per country” limitation to be in accordance with community law. Continue reading
The finance ministry has decreed that all assessments in which the foreign tax credit is less than that actually borne are to be issued provisionally pending a change in the law to reflect personal allowances in the calculation. Taxpayers may apply for a stay of execution on any amount at issue. Continue reading
The ECJ has held that the notional tax on foreign source income should not be reduced by a portion reflecting domestic allowances and relief Continue reading
The ECJ has held that freedoms of establishment and of capital movement preclude national legislation relieving foreign tax by credit as opposed to the exemption of domestic source income where the actual corporation tax paid by domestic companies is generally less than the nominal rate. It has also accepted the freedom of capital movement as relevant, unless the national legislation was aimed at controlling interests. Continue reading
The Supreme Tax Court has held that credit for foreign gift tax is limited to the amount paid in the year of each gift. Lost credit in a prior year cannot be recovered against the higher tax now payable by reason of a higher progressive rate.
The Supreme Tax Court has filed a preliminary question with the ECJ on the calculation of the German income tax attributable to foreign source income as the maximum amount of the foreign tax credit.