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Tax & Legal

Tax & Legal

Sky subscription for German football league games may constitute income-generating costs


The Supreme Tax Court has ruled the expenses of a football trainer for a Sky subscription to German football league (“Bundes League”) games may be treated as tax-deductible expenses from self-employed income. The appellant was a full-time trainer of goal keepers working in licensed football. 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

Federal Finance Ministry circular on the tax treatment of salaries for tax treaty purposes is updated.


The Federal Finance Ministry circular of 12 November 2014 on the taxation of salaries for tax treaty purposes has been revised by a committee made up of from both the Federal and the States’ governments. The new version recognises OECD developments as well as recent case law and relevant changes in the legislation. Continue reading

Principle of deemed single uniform compensation


Where an employer contractually obliges himself to make several payments to an employee in connection with a termination of employment, the payments will only be considered as a single uniform compensation payment if there is clear evidence that all instalments were paid “as compensation for lost income or expected loss of income”. Continue reading

Limited taxpayers: withholding tax on cross-border licensing of software


At the beginning of November 2017 the Federal Finance Ministry published the long-awaited circular on its intended application of the rules (Section 50a Income Tax Act)applying to limited taxpayers and withholding tax on cross-border licensing of software and databanks. Continue reading

Commercial transactions between friends; recognition of losses


On 8 November 2017 the Supreme Tax Court published a decision made on 9 May 2017 on a case involving a gratuitous share transfer between friends, where the transferor had significant acquisition costs. The Court held that the presumption of a commercial transaction is not rebutted purely because a friendship exists between the contracting parties. Continue reading

Bundesrat reacts positively to exchange of information for tax-saving schemes


At its sitting on 22 September 2017 the Bundesrat (Federal Council/upper house) expressly welcomed the proposal for an amendment of Council Directive 2011/16/EU on administrative cooperation in the field of taxation to impose a reporting obligation on cross-border schemes. It has long been a demand of the Bundesrat that rules on reporting obligations be introduced. Continue reading

Referral to Federal Constitutional Court: trade tax on the profits arising on the disposal of an interest in a partnership by persons other than individuals.


The First Senate of the Federal Constitutional Court heard arguments on the constitutionality of a provision in the Trade Tax Act, according to which trade tax was levied on the sale of business interests. The case has opened up a question of principle with regard to trade tax. Continue reading