RSS-Feeds German Tax and Legal News

14.06.2024 German Tax and Legal News

Federal tax court clarifies application of switch-over clause in the Germany-US tax treaty

Certain payments made to German resident partners in a US partnership are tax exempt even if only partially taxed in the US.

13.06.2024 German Tax and Legal News

The New GoBD 2024 and its Impact on Future Tax Audits

With the letter dated March 11, 2024, the tax administration has published significant changes to the so-called GoBD (Principles for the Proper Management and Retention of Books, Records and Documents in Electronic Form, as well as Data Access), which came into effect on April 1, 2024. In addition to an extension of the ability of the tax auditor to estimate taxation basis in course of audits, the letter also includes changes to the manner in which audit-relevant data is made available to the tax administration. In conjunction with the discussion draft on the standardized digital interface for accounting data (DSFinVBV-E) which first became available at the end of last year, initial conclusions can be drawn regarding future requirements for data access in audits.

07.06.2024 German Tax and Legal News

Lower tax court provides favorable decision for trade tax loss carry-forwards

An interest in a partnership should not be harmful for making use of an exception from the general change-in-ownership rules for trade tax purposes

22.05.2024 German Tax and Legal News

Ministry of Finance publishes first draft of proposal for Annual Tax Act 2024

Draft proposal includes technical updates and amendments without any tax reform proposals

22.04.2024 German Tax and Legal News

New transfer pricing rules for intercompany financing contain tightened provisions

The business tax reform bill (“Growth Opportunity Act”) (see GTLN dated 03/27/24), which was signed by the president and published in the federal gazette on 27 March 2024, has tightened the transfer pricing rules in the Foreign Tax Act (FTA) regarding cross-border intercompany financing arrangements. The final version of the bill no longer includes the maximum interest barrier rule (see GTLN dated 10/17/23), although such rule was in the original draft bill that was introduced into the legislative process by the government (see GTLN dated 09/04/23). The newly introduced sections 1 (3d) and (3e) FTA are similar to certain transfer pricing rules that were proposed at the end of 2019 in the first draft of the EU anti-tax avoidance directive (ATAD) implementation law (see GTLN dated 12/12/19) but were not implemented at that time. This article provides an overview of these new transfer pricing rules for cross-border intercompany financing arrangements, which include a three-prong test (i.e., debt capacity, business purpose, and maximum interest rate) and a description of “low-function” and “low-risk” services for purposes of the arm’s length principle and calculating an arm’s length remuneration.

17.04.2024 German Tax and Legal News

Government responds to inquiry on dividend WHT exemption and refund procedures

The German government on 8 April 2024 published a response letter dated 2 April 2024 in regard to an inquiry of the leading opposition parties in the lower house of parliament (Christian Democratic Union and Christian Social Union) on the current status of the dividend withholding tax (WHT) exemption certificate and refund procedures for foreign shareholders. The original inquiry of the opposition parties was filed on 19 March 2024 and included 18 questions to the government in this regard. The responses that were provided by the government on 8 April 2024 reveal a significant backlog and overly long processing periods for applications for dividend WHT exemption certificates and refunds at the federal tax office (Bundeszentralamt fuer Steuern (BZSt)). Submitting formalized inquiries to the government is seen as the main mechanism for minority parties in the lower house to control the government; original inquiries and responses from the government are published as official documents by the lower house.

04.04.2024 German Tax and Legal News

Federal tax court clarifies conditions for transfer of trade tax NOL carryforwards in a hive-down transaction

In a decision dated 1 February 2024 and published on 21 March 2024, Germany’s federal tax court (BFH) ruled that net operating loss (NOL) carryforwards for trade tax (TT) purposes were transferred from a corporation to a partnership in a hive-down transaction pursuant to section 24 of the reorganization tax code (RTC), as the corporation transferred all of its German business activities to the partnership and no German business activities remained at the level of the corporation, except for its interest as a limited partner (LP) in the partnership and its shareholding in the general partner (GP) of the partnership. The potential utilization of the NOL carryforwards for TT purposes at the level of the receiving partnership is relevant because, based on partnership taxation principles, the partnership is transparent for corporate income tax but opaque for TT purposes and, therefore, subject to TT.

03.04.2024 German Tax and Legal News

Lower tax court decides on tax deductibility of costs for IT consolidation in the context of a merger

In a decision dated 19 October 2023 and published on 21 March 2024, Germany’s lower tax court of Bremen ruled that costs for the consolidation of information technology (IT) systems after a merger do not qualify as “costs for the transfer of assets” within the meaning of section 12(2) sentence 1 of the German Reorganization Tax Act (RTA) and are therefore immediately deductible for corporate income tax purposes. The decision, which is line with the principles expressed by the federal tax court in previous decisions, is based on the reasoning that the consolidation of the IT systems is an operational business decision related to the functions of the combined entities rather than related to the merger transaction itself.

27.03.2024 German Tax and Legal News

Upper house of parliament approves business tax reform bill

Approved bill includes tightened transfer pricing rules for cross-border financing arrangements and other tax changes for businesses

18.03.2024 German Tax and Legal News

MOF updates draft guidance on compliance and documentation requirements for virtual currency and token transactions

Draft guidance replaces earlier 2022 draft guidance, final guidance would be incorporated into existing virtual currency decree.

01.03.2024 German Tax and Legal News

German tax authorities update guidance on criteria for a permanent establishment

The guidance includes a statement that a home office generally should not create a permanent establishment

18.01.2024 German Tax and Legal News

Federal constitutional court provides for tax neutral asset transfers between partnerships with identical partners holding same interest percentages

Difference in treatment violates constitutional principles of equality

11.01.2024 German Tax and Legal News

Tax authorities issue guidance on the attribution of real estate for RETT purposes

Guidance could result in additional compliance burdens and even double taxation

21.12.2023 German Tax and Legal News

Federal tax court rejects cross-border tax consolidation without actual loss transfer or agreement

Court denies violation of EU law in the decided case and does not involve the CJEU

18.12.2023 German Tax and Legal News

Upper house of parliament approves legislation to implement EU Pillar Two directive

Pillar Two rules apply for fiscal years that start after 30 December 2023

18.12.2023 German Tax and Legal News

Decision about business tax reform bill delayed into 2024

Minor technical amendments implemented as part of an omnibus bill include changes to interest deduction limitation rules and real estate transfer tax

08.12.2023 German Tax and Legal News

BFH rules tax consolidation requirement met even if controlling parent entity involved in merger

Surviving parent entity inherits tax position of predecessor based on specific reorganization rules under corporate income tax code

05.12.2023 German Tax and Legal News

MOF publishes draft guidance on tax measures in regard to noncooperative jurisdictions

Anti-avoidance rules apply with regard to jurisdictions on the EU list

27.11.2023 German Tax and Legal News

Upper house of parliament does not approve draft business tax reform bill

Bill is forwarded to conference committee of the upper and lower houses of parliament to find a compromise

22.11.2023 German Tax and Legal News

Lower house of parliament approves draft business tax reform bill

Approved bill includes changes based on recommendations from the upper house

20.11.2023 German Tax and Legal News

Lower house of parliament approves legislation to implement EU Pillar Two directive

Approval of upper house of parliament expected in mid-December 2023

20.11.2023 German Tax and Legal News

Lower tax court accepts PE profits allocation method based on actual use of pipeline networks

Personnel function at headquarters level is not seen as providing a significant contribution

14.11.2023 German Tax and Legal News

Lower tax court clarifies application of double deduction rule for partnerships

Taxpayer favorable decision based on specifics of Dutch tax consolidation regime

17.10.2023 German Tax and Legal News

Considerations regarding proposals further limiting tax deductibility of interest expenses

Draft law would tighten existing rules and introduce a “maximum interest barrier rule”

11.09.2023 German Tax and Legal News

Germany signs new protocols to tax treaties with Austria and Switzerland

Protocols include BEPS and MLI measures and treatment of cross-border workers

11.09.2023 German Tax and Legal News

Federal tax court broadens concept of permanent establishment

Storage of personal items in designated locker at work site created permanent establishment

04.09.2023 German Tax and Legal News

Government approves draft business tax reform bill

Approved draft bill includes changes compared to the original published version

25.08.2023 German Tax and Legal News

Independent Advisory Board to the MOF issues statement raising concerns over EU debt-equity bias proposal

Statement supports the goal of reducing debt financing but criticizes the means described in the draft directive

22.08.2023 German Tax and Legal News

Government approves draft legislation to implement EU Pillar Two directive

Approved draft bill includes amendments to CFC rules and the royalty barrier rule

02.08.2023 German Tax and Legal News

Federal fiscal court rules on arrangement fees within the meaning of the interest deduction limitation rules

Federal fiscal court rules that arrangement fees are not interest expense within the meaning of the German interest deduction limitation rules

27.07.2023 German Tax and Legal News

Ministry of Finance discussion draft proposes amendments to share deals under RETT Act

Discussion draft must be approved by federal states prior to legislative process

27.07.2023 German Tax and Legal News

Mandatory domestic B2B e-invoicing proposed under the Growth Opportunities draft act

On 12 July 2023, the German Ministry of Finance (MOF) published a draft of the business tax reform bill (“Growth Opportunity Act”), which includes the introduction of mandatory electronic invoicing (e-invoicing) provisions for domestic business-to-business (B2B) supplies. After publishing a “working paper” version for discussion in April 2023, the MOF has considered input from business associations, particularly on the ambitious implementation deadline, and has finalized its plans to introduce mandatory B2B e-invoicing for domestic supplies. The draft bill is expected to be adopted by the end of 2023, and the new rules would come into force on 1 January 2025.

19.07.2023 German Tax and Legal News

Ministry of Finance issues draft decree on interpretation of anti-hybrid rules

On 13 July 2023, the German Ministry of Finance (MOF) published a long-awaited first draft of a decree on the interpretation of the German anti-hybrid rules, which are based on the EU anti-tax avoidance directive I and II (ATAD I and ATAD II) and were introduced on 25 June 2021 (with retroactive effect as from 1 January 2020). The draft decree (consisting of 52 pages with 18 examples) provides the view of the German tax authorities on the interpretation and application of the rules. Interested parties may provide comments on the draft decree until 10 August 2023.

14.07.2023 German Tax and Legal News

First draft of business tax reform bill of the Ministry of Finance released

Draft bill includes inter alia amendments to the existing interest deduction limitation rules and introduction of a maximum interest barrier rule.

14.07.2023 German Tax and Legal News

MOF issues updated guidance on relocation of functions

Tax authorities have amended controversial guidance regarding relocation of functions

11.07.2023 German Tax and Legal News

Ministry of Finance publishes updated legislation to start the process of implementing the EU Pillar Two global minimum taxation directive into German domestic law

Updated draft bill includes amendments to German CFC rules and would abolish royalty barrier rule

11.07.2023 German Tax and Legal News

Lower tax court clarifies application of subject-to-tax rule in Germany-US double tax treaty

Partial non-taxation is not sufficient to apply switch-over from exemption to credit method

11.07.2023 German Tax and Legal News

Lower tax court decides on trade tax loss forfeiture in case of shareholder change in a partnership that is a controlling parent entity in a tax group

Lower tax court confirms view of the tax authorities that results in a current year loss forfeiture for trade tax purposes in consolidated tax groups with a controlling partnership.

27.06.2023 German Tax and Legal News

Legislation to implement EU public country-by-country reporting directive into German domestic law has been enacted

Final rules are in line with requirements described in EU directive.

27.06.2023 German Tax and Legal News

MOF issues updated transfer pricing principles, replacing previous guidance

Tax authorities have amended controversial guidance regarding intercompany financing relationships.

21.06.2023 German Tax and Legal News

Updated decree on RETT intragroup restructuring clause published

Updated decree clarifies conditions on RETT intragroup restructuring exemption.

26.04.2023 German Tax and Legal News

Guidance issued on use of OECD model commentary in double tax treaty interpretation

MOF does not follow the opinion of the federal tax court and emphasizes dynamic application of the OECD model commentary

20.04.2023 German Tax and Legal News

Draft letter published by the German Ministry of Finance regarding bad debt adjustments for credit institutes dated 12th April 2023

In its draft letter on bad debt adjustments for credit institutes, the German Federal Ministry of Finance has for the first time commented on the specific requirements for the respective recognition in the tax accounts. Associations now have the opportunity to position themselves and comment on the draft letter until 10th May 2023.

12.04.2023 German Tax and Legal News

Lower tax court clarifies application of EU parent-subsidiary directive for dividends distributed during liquidation period of subsidiary

To the extent a distribution is related to profits generated in pre-liquidation periods the EU parent-subsidiary directive should be applicable.

22.03.2023 German Tax and Legal News

Ministry of Finance publishes draft legislation to implement the EU Pillar Two Global Minimum Taxation Directive into domestic German tax law

Draft bill is in line with requirements as described in the EU directive, introduces qualified domestic minimum top-up tax (QDMTT).

16.03.2023 German Tax and Legal News

Lower tax court rules that dividends paid to US S-Corporation qualify for a reduced 5% or 0% WHT under the Germany-US DTT

Lower tax court decision confirms 2013 federal tax court decision and rejects tax authorities’ view that law change has changed the treatment of S-Corporations.

08.03.2023 German Tax and Legal News

Federal tax court confirms income tax treatment of cryptocurrency transactions

Federal tax court in a long awaited decision confirms government position on taxing cryptocurrency gains as taxable income.

02.03.2023 German Tax and Legal News

EU adds Russia to the list of non-cooperative jurisdictions

The addition of Russia might trigger significant German tax consequences starting from 2024.

17.02.2023 German Tax and Legal News

Regional tax office clarifies conditions for tax-free repayment of capital by EU subsidiaries

Clarification of MoF decree that was issued in April 2022.

15.02.2023 German Tax and Legal News

MOF publishes updated guidance on R&D tax incentive

Updated guidance replaces 2021 guidance and incorporates practical experience with the incentive that was introduced starting from 2020.

08.02.2023 German Tax and Legal News

German tax authorities publish FAQs on how to apply reporting obligations for digital platforms (DAC 7)

The guidance from the German tax authorities includes 16 pages and follows shortly after the DAC 7 implementation law entered into force on January 1, 2023.

12.01.2023 German Tax and Legal News

New mandatory electronic filing procedure for withholding tax exemption certificates and refund procedures apply as from 1 January 2023

Starting from 1 January 2023 filings have to be made via an electronic portal of the federal tax office; prior registration of the applicant is required.

11.01.2023 German Tax and Legal News

Government approves draft legislation to implement EU public country-by-country reporting directive into German domestic law

Approved draft bill is in line with requirements described in EU directive.

06.01.2023 German Tax and Legal News

DAC 7 implementation law and amended transfer pricing documentation rules finally implemented

German DAC 7 rules stay close to the provisions of the EU directive. The general tax code has been updated to modernize procedural aspects of German tax law and to include updated TP documentation rules.

21.12.2022 German Tax and Legal News

Upper House of parliament provides final approval of amended German ETT/ORIP rules

For German registered rights, limited German tax liability is abolished with retroactive effect for 3rd party payments and for related party payments for periods after 2022 in case treaty protection is available.

16.12.2022 German Tax and Legal News

BFH rules on RETT intragroup restructuring

BFH clarifies conditions of RETT intragroup restructuring exemption in upstream merger case.

09.12.2022 German Tax and Legal News

Amended RETT rules would result in increased importance of timely filed RETT notifications in case of share purchase transactions

Timely filings would be required in order to avoid triggering RETT twice in the same transaction.

07.12.2022 German Tax and Legal News

Lower House of parliament approves bill that would significantly reduce scope of German ETT/ORIP rules

For German registered rights, limited German tax liability would be abolished with retroactive effect for 3rd party payments and for related party payments for periods after 2022 in case treaty protection is available.

06.09.2022 German Tax and Legal News

(Sound) Compensation @ Nachweisgesetz 2022

The modified requirements for the notification of the remuneration components in the Nachweisgesetz

25.08.2022 German Tax and Legal News

BFH rules on conditions of German PE due to service provider activities

Activities of a domestic service provider generally do not cause a foreign real estate investor to have a German PE.

23.08.2022 German Tax and Legal News

Introduction of Sec. 22g German VAT Act - Special obligations for payment service providers

The german government has presented the first draft of Annual Tax Act 2022 including the new general recording obligations of payment service providers in the context of the transposition of the EU Di-rective 2020/284 of 18 February 2020.

01.08.2022 German Tax and Legal News

MOF issues draft bill that would significantly reduce scope of German ETT/ORIP rules

For German registered rights, limited German tax liability would be abolished as from 2023 and with retroactive effect for third party royalties

21.07.2022 German Tax and Legal News

MOF publishes DAC 7 draft implementation bill into German domestic tax law

The proposed bill stays close to the provisions of the EU directive and in addition includes several provisions to modernize general procedural aspects of German tax law.

30.06.2022 German Tax and Legal News

MOF grants another extension of the filing deadline for certain extraterritorial taxation of royalty payment-related filings

The current 30 June 2022 deadline is extended to 30 June 2023. In addition, the MOF publishes its ETT/ORIP report to the German parliament.

30.06.2022 German Tax and Legal News

Brazil and OECD present the main features of the proposed new transfer pricing system in Brazil

At a joint event held on 12 April 2022 in Brasília, the Organization for Economic Cooperation and Development (“OECD") and the Brazilian Federal Revenue Service (“RFB”) presented the key features of Brazil’s proposed new transfer pricing (“TP”) system. The proposed changes are the outcome of a joint project launched in February 2018 between OECD and RFB, in which the TP framework currently in place in Brazil was assessed as compared to the international consensus on transfer pricing (represented by the OECD TP Guidelines) and where a number of gaps and divergences were identified.

22.06.2022 German Tax and Legal News

Tax authorities issue guidance on amended RETT rules

Guidance includes welcome clarification on expansion of rules previously limited to partnerships to apply to corporations.

13.06.2022 German Tax and Legal News

Upper house approves fourth COVID-19 tax aid bill

Final bill includes more generous loss carryback provisions and extension of income tax return filing deadlines

24.05.2022 German Tax and Legal News

Lower tax court rules on cash-roundtripping structure to avoid cancellation-on-indebtedness income

Cash-roundtripping might be seen as abusive if not implemented in the right way.

18.05.2022 German Tax and Legal News

MOF publishes final decree on tax treatment of virtual currencies and tokens

Final guidance includes some changes and clarifications compared to the initial draft decree that was published in 2021.

09.05.2022 German Tax and Legal News

Lower tax court confirms income tax treatment of cryptocurrency transactions

Lower tax court (again) confirms government position on taxing cryptocurrency gains as taxable income

03.05.2022 German Tax and Legal News

Lower tax court rules on conditions for participation exemption for dividends

Tax court provides clarification on the application of the 10% minimum shareholding requirement for the participation exemption.

27.04.2022 German Tax and Legal News

MoF publishes long awaited decree on conditions for tax-free repayment of capital by non-EU subsidiaries

Decree follows principles as established by past decisions of the federal tax court.

12.04.2022 German Tax and Legal News

MoF decree further extends 2020 corporate income tax return filing deadline for returns prepared by a professional tax advisor

Action anticipates approval of bill containing COVID-19 relief measures.

05.04.2022 German Tax and Legal News

Draft bill reducing interest rate for late tax payments approved by Government

Draft bill providing for a reduced interest rate on late tax payments and refunds of 0.15% per year approved by German Government.

25.03.2022 German Tax and Legal News

Brazilian milestones towards convergence with the OECD Transfer Pricing standard

On 25 January 2022, the Council of the Organization for Economic Cooperation and Development (“OECD") has officially initiated the process of Brazil's accession as a member.[1] Since the country's application for membership in 2017, the harmonization of the Brazilian local tax rules with the OECD Transfer Pricing Guidelines has been outlined as one of the main commitments the country would have to assume.

16.02.2022 German Tax and Legal News

Lower tax court rules on income tax treatment of cryptocurrency transactions

Lower tax court confirms treatment of cryptocurrency gains as taxable income.

16.02.2022 German Tax and Legal News

Tax reform requires all German real estate to be revalued for property tax purposes

All real estate will be valued as at 1 January 2022, based on information reported by taxpayers in property tax returns.

09.02.2022 German Tax and Legal News

BFH rules on tax treatment of incongruent dividend distributions

BFH provides clarification on the application of GAAR rules on incongruent dividend distributions.

09.02.2022 German Tax and Legal News

MOF publishes draft of fourth COVID-19 tax aid bill

Draft bill includes more generous loss carryback provisions and extension of income tax return filing deadlines.

02.02.2022 German Tax and Legal News

MOF publishes two decrees detailing the application of the royalty barrier rule

Decrees include an updated list of non-nexus compliant preferential tax regimes and guidance for the application of the rules.

02.02.2022 German Tax and Legal News

MOF publishes decree announcing not to apply favorable 2016 federal tax court decision regarding dual-consolidated loss rules

Decree outlines the MOF’s opinion to apply the DCL rules on a stand-alone basis instead of a consolidated basis.

14.12.2021 German Tax and Legal News

COVID-19: Relief measures further extended relating to tax liquidity assistance

Relief measures for several tax liquidity assistance measures for taxpayers extended until 2022.

26.11.2021 German Tax and Legal News

New government publishes draft coalition agreement including broad tax policy goals

High-level agenda includes expected tax policy objectives and some surprises; tax rises are no longer explicitly excluded.

26.10.2021 German Tax and Legal News

Federal tax court confirms ruling of lower tax court regarding the pre-2021 anti-treaty shopping rules

Court rejects tax authorities’ arguments in light of CJEU case law.

19.10.2021 German Tax and Legal News

Potential future coalition parties issue guiding principles for government tax policy

Preliminary agreement between potential coalition parties indicates intent to forgo tax hikes and introduction of new taxes.

13.09.2021 German Tax and Legal News

Federal tax court rules on “direct shareholding” requirement in PSD

Federal tax court confirms broadened application of PSD in a taxpayer-favorable decision

06.09.2021 German Tax and Legal News

German tax authorities issue guidance on transition provisions for amended RETT rules

Guidance is limited to transition rules; further guidance on the broader interpretation of amended RETT rules is awaited

20.08.2021 German Tax and Legal News

Federal Constitutional Court rules interest rate on tax payments unconstitutional

Annual 6% interest rate may no longer apply for 2019 and subsequent years

10.08.2021 German Tax and Legal News

Potential impacts of amended RETT rules for share deal transactions

Amended RETT rules could result in unexpected tax consequences in share deal transactions.

29.07.2021 German Tax and Legal News

Updated transfer pricing principles provide new MOF guidance on financing structures

Tax authorities require “control” and “risk” at the level of a foreign financing company to claim a German interest deduction.

15.07.2021 German Tax and Legal News

MOF grants extension of deadline for certain filings relating to extraterritorial taxation of royalty payments

Original 31 December 2021 deadline is extended to 30 June 2022

25.06.2021 German Tax and Legal News

ATAD Implementation Law to enter into force after finally approved by both chambers of the German parliament

Anti-hybrid rules to become effective retroactively as from 1 January 2020.

22.06.2021 German Tax and Legal News

MOF publishes draft decree on tax treatment of virtual currencies and tokens

Draft guidance includes detailed description of virtual currencies and related income tax consequences.

25.05.2021 German Tax and Legal News

Lower house of parliament approves law to implement EU anti-tax avoidance directive into German tax law, along with other measures

Anti-hybrid rules to become effective retroactively as from 1 January 2020, including some changes from earlier proposals.

10.05.2021 German Tax and Legal News

Amended RETT rules on share transfers approved by both chambers of parliament

Amendments will increase complexity and reduce threshold for application of rules as from 1 July 2021

21.04.2021 German Tax and Legal News

CJEU decides on the German interpretation of the VAT group

The conditions under which Germany allows the financial integration of partnerships in a VAT group contradict European law.

08.04.2021 German Tax and Legal News

Governing grand coalition reaches agreement on draft law to amend RETT rules on share deals

Legislative process to amend RETT rules is expected to be completed by June 2021 and amended rules likely will be effective as from 1 July 2021.

07.04.2021 German Tax and Legal News

MOF publishes final decree on application of DAC 6 rules

Only minor changes made to 2020 draft decree.

01.04.2021 German Tax and Legal News

CJEU: Services exchanged between a company and its foreign branch can be subject to VAT

Following the “Skandia America” case (C-7/13), the CJEU has again ruled how services between a company and its foreign branch are to be assessed in case a VAT group is involved. It remains to be seen whether and how the German tax authorities will apply these principles.

01.04.2021 German Tax and Legal News

ECJ rules on the extent of the VAT exemption for the development, licensing and mediation of insurance products

Insurance mediation is VAT exempt. Selling of insurance products is also VAT exempt. Is the licensing of an insurance product also VAT exempt? Does a VAT exemption, which applies to an ancillary service, if considered separately, but is not applicable to the main service, have an impact on the VAT treatment of the single supply?

29.03.2021 German Tax and Legal News

MOF publishes decree extending application of substance-based exception to German CFC rules

Non-EU/EEA resident companies may qualify for substance-based carve-out, provided certain conditions are met.

29.03.2021 German Tax and Legal News

Corporate law change could affect validity of profit and loss transfer agreements

MOF decree gives affected taxpayers until 31 December 2021 to amend agreements.

29.03.2021 German Tax and Legal News

COVID-19: Relief measures further extended relating to cross-border commuters and tax liquidity assistance

Relief measures for certain cross-border commuters and several tax liquidity assistance measures for taxpayers extended until at least 30 June 2021.

25.03.2021 German Tax and Legal News

MOF publishes draft law proposing to modernize corporate income tax rules

Option for partnerships to be taxed as corporations would be introduced, among other measures.

25.03.2021 German Tax and Legal News

MOF publishes updated draft law to implement the EU anti-tax avoidance directive into German tax law

Anti-hybrid rules would be retroactively effective as from 1 January 2020; low-taxation threshold under CFC rules would not be reduced.

24.03.2021 German Tax and Legal News

Government approves significant updates to domestic withholding tax rules

Draft law would tighten application of anti-treaty shopping rules substantially and modernize existing WHT procedural rules.

16.03.2021 German Tax and Legal News

Lower tax court clarifies criteria for classification of a US limited liability company for German tax purposes

Lack of an obligation to contribute equity does not count in favor of classifying an LLC as transparent.

19.02.2021 German Tax and Legal News

New rule in Germany for Reverse-charge on TCS

As of 1 January 2021, Germany has introduced the reverse charge mechanism for supplies of B2B telecommunication services (TCS). The rule applies to recipients who are resellers of TCS, independent of where they operate their business.

17.02.2021 German Tax and Legal News

MOF publishes draft law proposal to implement anti-avoidance measures in relation to noncooperative jurisdictions

Deduction for payments to recipients in jurisdictions on EU “black list” may be denied, among other measures.

16.02.2021 German Tax and Legal News

MOF publishes decree on extraterritorial taxation of royalty payments and IP transfers

Decree provides procedural relief for certain taxpayers subject to German extraterritorial tax.

12.02.2021 German Tax and Legal News

2019 income tax and VAT return filing deadline to be extended to 31 August 2021

Extension to apply for returns prepared by a professional tax service provider.

05.02.2021 German Tax and Legal News

German tax authorities disallow the application of TOMS to non-EU travel agents

The German Ministry of Finance announced not applying the special scheme for travel agents (TOMS) to non-EU travel agents as of 1 January 2021. This opinion could cease the competitive advantages that non-EU travel agents enjoy in Germany so far when buying in and re-selling travel services.

04.02.2021 German Tax and Legal News

Overview of updated transfer pricing administrative guidance from the German tax authorities

Update of 2005 guidance leaves questions remaining that could lead to disputes between taxpayers and tax authorities.

20.01.2021 German Tax and Legal News

German extraterritorial taxation upheld without expected relief in approved government draft law proposal

Originally planned relaxation of extraterritorial taxation rules no longer included in government approved law proposal for the overhaul of German withholding tax rules.

18.01.2021 German Tax and Legal News

Germany and UK update existing tax treaty and announce plan for further amendments

Protocol will introduce additional anti-abuse provisions

14.01.2021 German Tax and Legal News

COVID-19: Relief measures further extended for cross-border commuters between Germany and certain neighboring countries

Relief measures extended until at least 31 March 2021

04.01.2021 German Tax and Legal News

MOF issues decrees to extend various COVID-19 measures

Administrative measures to mitigate consequences of COVID-19, 2019 corporate tax return filing deadline extended

10.12.2020 German Tax and Legal News

COVID-19: Relief measures introduced for cross-border commuters between Germany and Poland

Relief measures introduced with retroactive effect as from 11 March 2020

10.12.2020 German Tax and Legal News

Lower tax court interprets anti-treaty shopping rules in light of CJEU jurisprudence

WHT refund might be eligible for 6% annual interest payment from tax authorities.

07.12.2020 German Tax and Legal News

COVID-19: Extension of relief measures for cross-border commuters between Germany and Switzerland

Relief measures broadened and extended until at least 31 March 2021.

04.12.2020 German Tax and Legal News

Clarifications awaited following final Germany-US agreement on CbC report exchanges

2018 and 2019 interim agreements are replaced by permanent agreement, but details still must be specified.

01.12.2020 German Tax and Legal News

German draft law centralizes responsibility for EU law based WHT claims

The draft law on the modernization of the withholding tax relief law (AbzStEntModG) clarifies responsibility for Denkavit / Fokus bank claims.

24.11.2020 German Tax and Legal News

Draft law proposes changes to anti-treaty shopping rules

Proposed legislation responds to recent CJEU jurisprudence.

23.11.2020 German Tax and Legal News

Draft law would mitigate issues related to German extraterritorial taxation

Proposed legislation would narrow the definition of German nexus IP

12.11.2020 German Tax and Legal News

German limited tax liability for royalty payments abroad sec. 49 para 1 no 2 lit f and no 6 ITA (Extraterritorial Tax - ETT / Offshore receipt in respect of IP - ORIP)

Since approx. 100 years the German income tax law stipulates in sec. 49 para 1 no 2 lit f and no 6 ITA that license fees could become subject to withholding tax, when the underlying IP (right) is registered in a German public book (register). As it is not quite obvious from a German point of view to recognize which license agreements abroad do refer to IP registered in Germany (so called German Nexus IP), these transactions were overlooked in the past. This year the topic gained momentum and lots of multinational enterprises did recognize that they do have abroad license agreements in place containing German Nexus IP, such as trademarks and patents.

12.11.2020 German Tax and Legal News

COVID-19: Extension of relief measures for cross-border commuters of German neighbor countries

Relief measures officially extended until at least 31 December 2020.

10.11.2020 German Tax and Legal News

Upper house of parliament approves ratification of MLI

MLI still needs to be ratified to become effective, additional legislation required for specified covered tax agreements.

09.11.2020 German Tax and Legal News

Ministry of Finance issues decree describing filing obligations in connection with extraterritorial taxation

Decree underscores importance of compliance with filing obligations relating to rights registered in a German public register.

14.10.2020 German Tax and Legal News

Lower house of parliament approves ratification of MLI

List of covered tax agreements reduced to 14 jurisdictions

29.09.2020 German Tax and Legal News

Lower tax court rules on treatment of remaining liabilities of company initiating liquidation procedure

Initiation of liquidation process did not automatically result in cancellation-of-debt income.

08.07.2020 German Tax and Legal News

Government announces it will not defer DAC 6 reporting deadlines

Germany to opt out of six-month extension for reporting deadlines.

30.06.2020 German Tax and Legal News

COVID-19: Extension of relief measures for cross-border commuters to and from Belgium

Decree further extends relief measures for cross-border commuters.

30.06.2020 German Tax and Legal News

COVID-19: Upper and lower houses of parliament approve economic stimulus bill

Stimulus bill to enter into force on 1 July 2020.

16.06.2020 German Tax and Legal News

COVID-19: Relief measures introduced for Switzerland cross-border commuters

Mutual agreement concluded between Germany and Switzerland.

15.06.2020 German Tax and Legal News

COVID-19: Government approves economic stimulus bill

Draft stimulus bill includes measures previously announced by governing coalition

11.06.2020 German Tax and Legal News

Envisaged amendments to tax criminal law provisions contained in the German Fiscal Code (Abgabenordnung) as part of the planned Second Corona Tax Stimulus Act

The Federal Cabinet is expected to in the short term deal with a draft law on a Second Corona Tax Stimulus Act. According to the current plans of the Federal Ministry of Finance, however, in addition to changes to individual tax laws, significant amendments to tax criminal law provisions contained in the German Fiscal Code are to become the subject of the legislative procedure. These changes are not related to or induced by the COVID-19-Pandemic, but owed to the investigation of tax crimes in connection with so-called cum/ex transactions, which are perceived as being lengthy and time-consuming.

05.06.2020 German Tax and Legal News

Economic stimulus package 2020 - temporary reduction of VAT rates

On 3 June 2020, the Federal Government (Coalition Committee) adopted the 2020 economic stimulus package.

05.06.2020 German Tax and Legal News

COVID-19: Government agrees on comprehensive financial and tax measures

Measures include temporary reduction of VAT rates and option of increased loss carrybacks

28.05.2020 German Tax and Legal News

COVID-19: Update on relief measures for France and Belgium cross-border commuters

Two decrees extend/clarify relief measures for cross-border commuters.

06.05.2020 German Tax and Legal News

Lower tax court clarifies application of RETT rules in case involving downstream merger of partner into its partnership

Broad interpretation of RETT-triggering events taken in case involving real estate-owning partnership.

27.04.2020 German Tax and Legal News

COVID-19: Government allows deferred wage tax filing

Employers affected by COVID-19 may defer their monthly or quarterly wage tax filings for up to two months.

14.04.2020 German Tax and Legal News

COVID-19: Additional tax measures announced and implemented by government

Measures include several decrees to provide assistance for taxpayers

24.03.2020 German Tax and Legal News

COVID19: German Federal Cabinet launched a package of measures with law amendments

On March 23, 2020, the German Federal Cabi-net launched a package of measures with amendments in various areas of law on the parliamentary path. For example, insolvency law is to be relaxed, a possibility to conduct meetings online created or and certain pay-ment obligations be deferred.

23.03.2020 German Tax and Legal News

COVID-19: Measures regarding Short-time work and short-time work compensation

Against the background of the consequences of the COVID 19 pandemic, which are already being felt on the German market, employers must make use of all available options to minimize personnel costs and ensure liquidity. This is where the use of short-time work compensation can help.

23.03.2020 German Tax and Legal News

Two decrees with tax relief measures to boost liquidity published

Administrative measures to mitigate consequences of COVID-19

17.03.2020 German Tax and Legal News

Court decisions clarify interpretation of trade tax exemption for real property

Certain issues clarified that have been disputed between German tax authorities and taxpayers.

13.03.2020 German Tax and Legal News

MOF issues guidance on guaranteed minimum dividend payments to minority shareholders in tax consolidated group

Circumstances clarified where variable compensation payments to shareholders are not harmful to existence of tax group.

13.03.2020 German Tax and Legal News

MOF publishes first draft of decree for application of DAC 6 rules

Detailed guidance from tax authorities on how to apply mandatory disclosure rules.

25.02.2020 German Tax and Legal News

BFH rules on application of RETT intragroup exemption clause

Court interprets clause broadly and rejects literal reading of statutory language.

25.02.2020 German Tax and Legal News

MOF publishes nonexclusive list of non-nexus-based tax regimes for purposes of royalty barrier rule

List includes noncompliant tax regimes and regimes that are under review.

07.02.2020 German Tax and Legal News

At a glance: Important information as of 1 January 2020 relevant for employers

As every year, 2020 has also important changes in the area of wage tax and the social security right. This article lists the most important changes you need to know for your current wage tax billing.

23.12.2019 German Tax and Legal News

ATAD-implementation law: Draft law includes long-awaited reform of CFC rules

On 10 December 2019, Germany’s federal Ministry of Finance published a draft law that would implement the EU anti-tax avoidance directive (including provisions of ATAD I and ATAD II), into domestic law. The draft includes a long-awaited reform of Germany’s controlled foreign corporation (CFC) rules and other significant tax-related changes.

20.12.2019 German Tax and Legal News

EU Anti-Tax Avoidance-Directive: Implementation of significant changes to the German transfer pricing rules initiated

The draft law implementing the Anti-Tax Avoidance Directive (ATADUmsG) includes extensive and fundamental changes to the German transfer pricing rules.

12.12.2019 German Tax and Legal News

ATAD implementation law: German Ministry of Finance issued first draft of anti-hybrid rules

The German Ministry of Finance issued a first draft of an “ATAD implementation law” (“ATAD-Umsetzungsgesetz”) on December 10, 2019. The draft law includes inter alia the implementation of anti-hybrid rules as required by ATAD II, a major overhaul of the German CFC rules and an amendment of the German exit tax rules. From a TP perspective the draft law includes the implementation of the revised interpretation of the arm‘s length principle based on the OECD Transfer Pricing Guidelines 2017 and a legal framework for Advanced Pricing Agreements.

05.12.2019 German Tax and Legal News

Joint Germany-US statement issued on spontaneous exchange of CbC reports for 2018

Interim solution for exchange of CbC reports extended to fiscal years beginning in 2018.

03.12.2019 German Tax and Legal News

Law to introduce R&D tax incentive adopted by upper house of parliament, submitted to president for approval

Incentive to apply as from 2020.

14.11.2019 German Tax and Legal News

Lower tax court confirms conditions for cross-border loss relief

Binding legal agreement between parent and subsidiary required for relief to be allowed for German tax purposes.

15.10.2019 German Tax and Legal News

BFH rules on constitutionality of discount rate for non-interest-bearing liabilities

BFH considers 5.5% discount rate for long-term liabilities in 2010 to be in line with constitutional principles.

09.10.2019 German Tax and Legal News

Impact of upcoming amendments to the German Real Estate Transfer Tax Act on real estate share deals

Upcoming amendments to the German Real Estate Transfer Tax Act (RETTA) will have significant implications on real estate transactions structured as share deals. Still available options for implementing restructurings without triggering RETT should be made use of.

04.10.2019 German Tax and Legal News

BFH changes view on domestic transfer pricing adjustments in tax treaty cases

Tax deduction disallowed for write-off of unsecured intercompany loan.

02.10.2019 German Tax and Legal News

Government publishes first draft of law to implement EU mandatory disclosure rules

Published draft no longer includes disclosure rules for domestic tax planning arrangements.

02.10.2019 German Tax and Legal News

Lower tax court rules on compatibility of German anti-treaty shopping rules with EU law

Anti-treaty shopping rules do not violate EU law in case of royalty payments to non-EU/EEA recipients.

23.09.2019 German Tax and Legal News

Upper house releases opinion on planned amendment of RETT rules

RETT amendment generally welcomed but some changes recommended

19.09.2019 German Tax and Legal News

BFH rules on possibility of tax-free repayment of capital by non-EU subsidiary

Repayment of capital by US subsidiary to its German corporate shareholder was fully tax exempt

19.07.2019 German Tax and Legal News

Audits focusing on insurance premium tax relating to intragroup contributions

A provision that may result in insurance premium payments made by a nonresident to an insurer in a third country being subject to tax in Germany—even in the case of intragroup contributions—increasingly is becoming the focus of tax audits.

04.06.2019 German Tax and Legal News

Lower tax court rejects tax authorities’ interpretation of CJEU ruling on anti-treaty shopping rules

Court decides rules violate EU law for all payments triggering withholding tax, regardless of whether a reduced rate applies based on an EU directive or an applicable tax treaty.

03.06.2019 German Tax and Legal News

Draft law on R&D tax incentive submitted to upper house of parliament

Draft law is mostly in line with discussion draft from MOF.

09.05.2019 German Tax and Legal News

Federal Ministry of Finance publishes draft law to amend RETT rules on share deals

Changes are intended to broaden the scope of the rules

15.04.2019 German Tax and Legal News

BFH rules on applicability of trade tax exemption for partner in real estate managing partnership

Partner was eligible for exemption relating to its share of rental income from real estate managing partnership.

11.04.2019 German Tax and Legal News

Domestic royalty WHT will not be applied to cross-border payments for online ads

Tax authorities abandon plans to apply domestic WHT rules to payments to nonresidents for online advertising.

08.04.2019 German Tax and Legal News

BFH rules merger gain is tax exempt in upstream merger into controlled fiscal unity subsidiary

BFH disallows 5% inclusion of deemed nondeductible business expenses.

28.03.2019 German Tax and Legal News

Russian Roulette and Texas Shoot-Out Clauses as elements of JV or Shareholder Agreements

How thoughtful drafting of agreements can help in avoiding and overcoming shareholder disputes

11.03.2019 German Tax and Legal News

BFH allows limited offsetting of interest expense and income in cash pool arrangements for trade tax purposes

Negative cash balances cannot be offset by future positive cash balances.

04.03.2019 German Tax and Legal News

Lower house of parliament finalizes Brexit Tax Implementation Act

Law includes measures to protect taxpayers from disadvantageous consequences resulting from Brexit.

04.03.2019 German Tax and Legal News

Ministry of Finance considering introduction of new R&D tax incentive

Incentive would be available for 25% of qualifying expenditure during a four-year period.

01.03.2019 German Tax and Legal News

The Transparency Register – Latest Developments Due to the 5th EU Anti-Money Laundering Directive

With the enactment of the German Anti-Money Laundering Act (AMLA), which was based on the 4th EU Anti-Money Laundering Directive, an electronically managed transparency register was introduced in Germany for the first time. With the 5th EU Anti-Money Laundering Directive, the European legislator now intends to further improve the preventive regime, with the aim of more effectively combatting money laundering practices and terrorist financing.

20.02.2019 German Tax and Legal News

Federal tax authorities considering applicability of royalty WHT to payments for online advertising

Several recent tax audits have shown an increased interest from tax inspectors in business expenses incurred for online advertising. The tax authorities’ preliminary position is that such payments to nonresidents might attract royalty withholding tax under the domestic rules.

19.02.2019 German Tax and Legal News

Tax authorities of federal states issue guidance on application of trade tax provisions following CJEU decision

Guidance is an interim solution pending the revision of provisions the CJEU found to violate EU law.

08.02.2019 German Tax and Legal News

Consequences of Brexit on Insurance Premium Tax liability

IPT generally will have to be paid by the policyholder.

05.02.2019 German Tax and Legal News

European Commission requests Germany to revise exit tax rules

European Commission considers German exit tax rules on capital gains taxation too restrictive in relation to EEA member states.

31.01.2019 German Tax and Legal News

Possible changes regarding the liability of a business acquirer in the event of insolvency

Deviation from the previous interpretation of Section 613a (1) German Civil Code in the case of opened insolvency proceedings: Decision of ECJ could substantially increase the risk of additional costs for the purchaser.

31.01.2019 German Tax and Legal News

Lower tax court rules on pre-2016 taxability of CFC income for trade tax purposes

Lower tax court of Baden-Wuerttemberg considers CFC income exempt from trade tax in years up to and including FY 15, and questions whether subjecting such income to trade tax in subsequent years is compatible with EU law.

15.01.2019 German Tax and Legal News

Implementation of the e-commerce package in Germany - first step

Germany: Promoting cross-border e-commerce B2C - Facilitating business through the new rules as of 01.01.2019.

19.12.2018 German Tax and Legal News

CJEU rules German RETT intragroup exemption in line with EU state aid rules

RETT intragroup exemption does not constitute state aid because it prevents excessive taxation and relies on objective criteria in line with objective and purpose of the RETT law.

30.11.2018 German Tax and Legal News

Finance ministers of federal states reach agreement on tightening of RETT rules

Federal MOF asked to introduce proposals into the legislative process

27.11.2018 German Tax and Legal News

Duty to provide private telephone number to employer considered as potential violation of personality rights

The judgement of the Thuringia Labor Court of 16 May 2018 clarified the question of the accessibility of the employee: An employee filed a lawsuit against the warning of his employer, who wanted him to have the private mobile phone number to set up an on-call duty against the employee's will. Rightly so, as the LAG Thuringia emphasized. The request to communicate the private mobile telephone number was a considerable encroachment on the employee's right of personality.

26.11.2018 German Tax and Legal News

Federal tax court rules downstream mergers with foreign shareholders are taxable

Long-standing dispute about tax consequences of down-stream merger of a company with foreign shareholders decided in favor of the tax authorities.

21.11.2018 German Tax and Legal News

Government draft bill of the Fourth Amendment to the German Reorganization Act: Facilitation of reorganizations involving UK legal entities

The German legislator wants to extend the possibilities for an orderly change into a German legal form available to companies affected by Brexit and extend time limits for cross-border mergers involving UK entities as transferring company. Contrary tendencies become apparent in the UK.

13.11.2018 German Tax and Legal News

Voluntary Disclosure: Risks for the former managing director of a German GmbH (limited liability company)

The identification of tax irregularities within a company brings about an obligation for the managing directors as the GmbH’s legal representatives to immediately correct the mistakes. In case of individuals who no longer act as managing directors this can lead to liability issues with respect to irregularities that occurred during their time in office.

13.11.2018 German Tax and Legal News

ECJ: No automatic forfeiture of vacation in case of a missing request for leave

Necessary amendment to internal processes due to current ECJ-rulings regarding forfeiture of vacation claims.

01.11.2018 German Tax and Legal News

MOF publishes decree on exit tax consequences where Germany’s taxing rights are restricted

The decree specifically refers to the tax treaties with Spain and Luxembourg

18.10.2018 German Tax and Legal News

Does the upload of freely accessible photographs to an external website require the copyright holder’s approval?

Uploading a copyright protected photograph on one’s website represents a violation of the exclusive right held by the copyright owner, even where the photograph in question had already been made publicly accessible on another website with the copyright owner’s consent. This is the conclusion reached by the European Court of Justice (“ECJ”) in its judgement of August 7, 2018 (Ref.: C-161/17) related to the interpretation of the term “making available to the public” within the meaning of Article 3 (1) of Directive 2001/29/EC (“Copyright Directive”), upon a respective request for a preliminary ruling handed in by the German Federal Supreme Court (“BGH”).

11.10.2018 German Tax and Legal News

MOF publishes first draft of Brexit Tax Implementation Act

Draft law includes measures to protect taxpayers from disadvantageous consequences resulting from Brexit.

02.10.2018 German Tax and Legal News

CJEU rules German trade tax rules violate EU law

CJEU rules that German trade tax rules that impose stricter conditions for the deduction of profits from shareholdings in a non-EU company than from German shareholdings violate the EU free movement of capital principle.

11.09.2018 German Tax and Legal News

Transition grant as benefit of company pension

Even a temporarily paid transition grant may constitute an insured benefit of company pension which is insolvency protected by the pension protection fund.

21.08.2018 German Tax and Legal News

MOF publishes revised guidance on notification obligations for foreign transactions

Amended guidance aims to alleviate the notification requirement for changes in ownership of foreign publicly traded companies.

09.08.2018 German Tax and Legal News

Ministry of Finance issues draft guidance on implementation of CJEU Skandia decision

Services provided by a foreign head office to a German branch belonging to a VAT group would be taxable in Germany under the reverse charge procedure.

07.08.2018 German Tax and Legal News

CJEU concludes Germany’s post-2011 anti-treaty shopping rules violate EU law

The CJEU issued a decision on 14 June 2018, concluding that Germany’s anti-treaty-shopping rules violate both the EU parent-subsidiary directive and the EU treaty, similar to prior decisions on the pre-2012 version of the rules.

 
Only show articles with focus on:
Only show articles over specific period:
Diese Webseite verwendet Cookies, um Ihnen einen bedarfsgerechteren Service bereitstellen zu können. Indem Sie ohne Veränderungen Ihrer Standard-Browser-Einstellung weiterhin diese Seite besuchen, erklären Sie sich mit unserer Verwendung von Cookies einverstanden. Möchten Sie mehr Informationen zu den von uns verwendeten Cookies erhalten und erfahren, wie Sie den Einsatz unserer Cookies unterbinden können, lesen Sie bitte unsere Cookie Notice.