The Constitutional Court has held the set calculation of the value of the land held by a company when assessing the transfer of the company’s shares to real estate transfer tax to be unconstitutional. The government has been given until June 30, 2016 to enact a different formula, to be applied retroactively to January 1, 2009. Continue reading
Tax & Legal
The Supreme Tax Court has held that the ten-year holding period for exempting a gain on sale of privately held property runs to the date the agreement to sell the property is binding on both parties regardless of any as yet unfulfilled condition subsequent. Continue reading
The Supreme Tax Court has laid a second case before the ECJ on the division of input tax incurred in the construction and operation of a dual-use building between taxable and exempt activity. Continue reading
The Supreme Tax Court has accepted the sale of mining rights attaching to a property no longer owned by the seller as the sale of a real estate right to be taxed as a capital gain. Continue reading
The ECJ has held that a Spanish transfer tax on the purchase of shares in a property-owning company is not similar to VAT and is therefore not precluded by the tax duplication prohibition of the Sixth Directive.
Transfers of shares in Spanish companies holding at least 50% of their assets in real estate are subject to a capital transfer tax if the transfer allows the acquirer effective control over the property. Transactions subject to this tax are specifically exempt from VAT under the VAT Act. A Spanish pension fund acquired 64% of the shares in a property company, bringing its total holding to 67%. It protested against its assessment to capital transfer tax on the grounds that the tax was, effectively, a substitute for VAT and thus precluded by the provisions of the Sixth (and now the VAT) Directive. However, the ECJ has rejected this claim, holding that the capital transfer tax is not similar to VAT and not therefore precluded by the Sixth Directive.
The ECJ case reference is C-139/12 Caixa d’Estalvis i Pensions de Barcelona, judgment of March 20, 2014.
Note: the corresponding German tax, real estate transfer tax (RETT), is levied on share transfers in any company owning German real estate that lead to the acquistion of an interest of at least 95%. The two taxes are not identical, although the arguments of the ECJ in support of the Spanish tax also hold good for the German levy.
The finance ministry has issued a decree on the place of performance of the services supplied to, in particular, offshore wind farms. Continue reading
The finance ministry has amended its VAT Implementation Decree to follow an ECJ ruling that a permanently moored houseboat is to be let as a property. Continue reading
The ECJ has held that a non-resident with German property income must be entitled to deduct the cost of an annuity if the annuity would not have been paid without the acquisition of the property.
The Supreme Tax Court has held that the interest income of a German-owned limited partnership in England is taxable in Germany as interest, and not exempt as trading income. The capital gain on the sale of the property is not exempt as taxable in the UK, merely because of the capital allowance claw-back.