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Tax & Legal

Tax & Legal

The Italian Budget Law 2019


The last version of the Italian Budget Law 2019 has been published in the Gazzetta Ufficiale from the 31. December 2018 and entered into force on the 1st of January 2019. The provisions include interesting innovations on the tax environment for taxpayers, both   legal entities and natural persons.

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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

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

Country-by-Country Reports: German Ministry of Finance releases circular.


On 20 December 2016 legislation was passed introducing measures to combat base erosion and profit shifting. A part of this legislation – introduced in the new Section 138a of the General Tax Code – imposed an obligation on multinational enterprises to report annually for each tax jurisdiction in which they do business, so-called Country-by-Country (CbC) reports. On 11 July 2017 the German Ministry of Finance released a circular, which provides some guidelines on the completion of the CbC reports. Continue reading

Multilateral Convention to counter aggressive tax avoidance arrangements has been signed.


On 7 June 2017 Germany together with the representatives of over 60 countries signed the multilateral convention, which should transpose the main recommendations of the G20/OECD Project against Base Erosion and Profit Shifting (BEPS Project) into existing bilateral tax treaties. Continue reading

Bundesrat approves legislation introducing restrictions on the deduction of royalty payments


In its sitting on 2 June 2017 the Bundesrat (the Upper House) approved the Act to Combat Harmful Tax Practices in connection with the Licensing of Rights. The new legislation is intended to prevent multinational businesses from transferring their royalty income to countries, which offer such income preferential treatment. Such preferential tax regimes (so-called Licence Boxes, Patent Boxes or IP-Boxes) are considered not to meet the demands of the OECD and G20 BEPS Project. The new provision should be applied to expenses arising after 31 December 2017 and is to be introduced by way of a new provision in the Income Tax Act (ITA). Continue reading

No deduction of final branch losses following EU law.


Payments made to a purchaser to compensate for a poor economic position following the transfer of an interest in a partnership may not be deducted from the domestic tax base to the extent they are attributable to a foreign branch (i.e. a permanent establishment for tax treaty purposes) of the partnership. In its decision the Supreme Tax Court cited a decision of the European Court of Justice (ECJ) from 2015. Continue reading