Deloitte Tax-News: German Tax and Legal News

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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.

02.08.2018 German Tax and Legal News

Hong Kong New Transfer Pricing Laws

Hong Kong's transfer pricing (TP) laws were passed on 04.07.2018 with the Inland Revenue (Amendment) (No. 6) Bill 2017 (Amendment Bill), which comes into force on 13.07.2018. This affirms Hong Kong's commitment to implement OECD's Base Erosion and Profit Shifting (BEPS) initiatives. In the following, Deloitte summaries the important points that businesses should pay attention to as they consider the implications of the changes, and plan for future regulatory compliance.

25.07.2018 German Tax and Legal News

Time-limitation and prior employment: Clarification by the Federal Constitutional Court

The Federal Constitutional Court recently clarified that the interpretation of the Federal Labor Court regarding a prior employment as to time-limited employment contracts not being based on justifying reasons is unconstitutional.

12.07.2018 German Tax and Legal News

Commission decision on German Sanierungsklausel annulled by European Court of Justice

The European Court of Justice has ruled that the Commission decision on the State aid status of the so-called restructuring clause (‘Sanierungsklausel’) in Section 8c (1a) of the German Act on Corporate Tax is null and void. For the Commission, this decision is a serious setback, with potentially far-reaching consequences. The main reasons of the Court can be inferred from the Opinion of Advocate General Vahl, who denies the selectivity of the restructuring clause in the present case because it only restores the general ability to offset loss as the reference system in cases of companies in need of restructuring.

10.07.2018 German Tax and Legal News

BFH rules on hidden profit distribution on merger and revival of debt

Revival of receivables after a merger can lead to hidden profit distribution

05.07.2018 German Tax and Legal News

Initial Coin Offerings (ICOs) - digital corporate financing on the blockchain

ICOs are increasingly attracting interest as an alternative form of corporate financing. Young (technology) companies raise record amounts in funding. Investors seek high profits. Regulatory authorities point out risks of loss. This article discusses selected regulatory and private law issues arising in the context of ICOs.

05.07.2018 German Tax and Legal News

Resignation from post-contractual non-compete obligation

The non-payment of the compensation for non-competition may cause a legally effective renunciation from post-contractual non-competition with future effect – even in unintentional form of an enraged email.

26.06.2018 German Tax and Legal News

Finance ministers of federal states recommend tightening of RETT rules

Proposed measures could create more complex rules

30.05.2018 German Tax and Legal News

Notarization of the incorporation of a German GmbH by a Swiss notary

A German GmbH has been incorporated by means of a formation deed of a Swiss notary public in Bern. The Local Court of Charlottenburg denied the registration of the GmbH with the Commercial Register, claiming that notarization procedures in Bern are not equivalent to notarization procedures in Germany. The Kammergericht, the Upper Regional Court for Berlin, rectified the Local Court’s decision. It views the notarization procedures as equivalent and, therefore, the GmbH as validly incorporated.

29.05.2018 German Tax and Legal News

Temporary employment after reaching the statutory retirement age

EU law does not preclude a national provision allowing the parties to an employment contract - without any further conditions - to postpone, possibly several times, the agreed termination of the employment relationship upon reaching the statutory retirement age by an agreement during the employment relationship.

29.05.2018 German Tax and Legal News

MOF abolishes VAT simplification rule for supplies in border areas

Abolition of the rule will increase the administrative burden for suppliers and customers.

18.05.2018 German Tax and Legal News

BFH questions constitutionality of 6% interest rate on tax payments

Court considers interest rate for 2015 and thereafter to be an unsubstantiated surcharge on additional tax payments.

17.05.2018 German Tax and Legal News

The new EU Regulation on Geo-Blocking – What online retailers need to consider

On February 27, 2018, the European Council adopted a regulation to ban unjustified geo-blocking in the single market (EU Regulation 2018/302). The regulation entered into force on March 22, 2018 and will apply – in time for the Christmas business – from December 3, 2018 onwards. The new regulation is another element of the EU’s strategy of building a free and secure digital single market. It follows other measures taken by the EU before, such as the ban on roaming charges, the modernization of data protection laws and the allowance of cross-border portability of online content. The present article outlines the key aspects of the new regulation.

15.05.2018 German Tax and Legal News

Transparency Register: exceptions and legal fiction of notification

Since October 1, 2017, German companies are required to disclose their beneficial owners by way of notification to the Transparency Register. This article discusses relevant practical constellations in which such notification is not required due to exceptions or legal fiction of notification.

15.05.2018 German Tax and Legal News

Legal Framework for Chinese Outbound Investments

Following the market economy reforms of the late 1970s, the importance of trade ties between companies located in the People's Republic of China has constantly been on the rise. In recent years, the role of Chinese outbound investments has undergone considerable change and has been subject to ever stricter regulation. Some of the rules applicable to Chinese outbound investments have recently, with effect as of March 1, 2018, been modified. The present article takes a closer look at the current legal framework for Chinese outbound investments

24.04.2018 German Tax and Legal News

Higher Regional Court of Munich: No registrability without legal basis in the articles of association

The decision of the Higher Regional Court of Munich dated July 25, 2017 - 31 Wx 194/17 deals for the first time at higher court level with even two topics that are relevant in practice. On the one hand, the Court specifies the requirements for representation regulations in articles of association of a GmbH. On the other hand, the Court clarifies the legal requirements and consequences of so-called shareholder resolutions piercing the articles of association (“satzungsdurchbrechende Gesellschafterbeschlüsse”).

17.04.2018 German Tax and Legal News

MOF issues guidance on VAT treatment of virtual currency

The guidance confirms that Germany will not impose VAT on cryptocurrency used as a form of payment.

11.04.2018 German Tax and Legal News

Decree on application of domestic anti-treaty shopping rules responds to CJEU decisions

Tax authorities respond to recent CJEU decisions and provide guidance how to apply German anti-treaty shopping rules in line with EU law

21.03.2018 German Tax and Legal News

BFH refers question to CJEU on VAT exemption for outsourcing in the banking sector

The BFH’s action is significant for banks that rely on service providers for cost optimization purposes.

06.03.2018 German Tax and Legal News

BFH rules on constitutionality of 6% interest rate on tax payments

BFH considers statutory interest rate to be constitutional on tax payments during 2013

05.03.2018 German Tax and Legal News

Insurance Premium Tax Newsletter

Foreign parent companies are subject to German insurance premium tax on premiums paid in connection with risks situated in Germany, if neither the insurer nor the policyholder is resident in Germany. The insured parent company is obliged to report and pay the insurance premium tax. Its German subsidiaries are liable for the tax.

09.02.2018 German Tax and Legal News

CJEU: Tour Operators Margin Scheme applies to B2B-transactions; Simplified margin calculation methods not allowed

The CJEU has ruled that Germany is in breach of EU law with respect to VAT on travel services. The ruling concerns the application of TOMS to business transactions and the application of simplified methods to calculate the margin. This decision is set to have significant implications for the entire travel industry.

08.02.2018 German Tax and Legal News

New German government publishes coalition agreement that includes tax policy

Description of tax policy’s goals and how to achieve these goals

05.02.2018 German Tax and Legal News

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

Lower tax court broadens application of PSD in a taxpayer-favorable decision

23.01.2018 German Tax and Legal News

At a glance: Important information as of 1 January 2018 relevant for employers

As every year, 2018 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.

04.01.2018 German Tax and Legal News

German tax authorities issue guidance on filing deadlines for 2017 tax returns

The German tax authorities have issued their annual guidance on the filing deadlines for the 2017 tax returns. The filing deadline for these returns is May 31, 2018. In cases where the tax returns are prepared by an external tax advisor, the filing deadline is typically extended to December 31, 2018.

27.12.2017 German Tax and Legal News

CJEU concludes Germany’s pre-2012 anti-treaty shopping rules violate EU law

Rules are incompatible with EU parent-subsidiary directive and freedom of establishment principle

12.12.2017 German Tax and Legal News

Collective Dismissal Notification - Impact of Temporary Workers on Employee Thresholds

The Federal Labor Court decided to ask the ECJ for a preliminary ruling on the impact of temporary workers on employee thresholds for collective dismissal notifications.

09.11.2017 German Tax and Legal News

Final decree issued on WHT on outbound payments for software and database usage

The enhanced guidance aims to clarify areas of uncertainty.

08.11.2017 German Tax and Legal News

Federal Ministry of Finance updates VAT treatment of supplies via consignment stock

Principles of BFH decisions on cross-border supplies of goods via consignment stock implemented into VAT act decree

30.10.2017 German Tax and Legal News

BFH rules capital gains from sale of shares by non-treaty-protected shareholder are 100% exempt from tax

Federal tax court decides in favor of shareholders

26.10.2017 German Tax and Legal News

Lower tax court holds 6% interest rate for pension accruals unconstitutional

Case has been referred to Federal Constitutional Court

12.10.2017 German Tax and Legal News

BFH rules on application of 5% addback on dividend distributions from CFCs

The addback applies regardless of whether dividend distributions are tax-exempt as previously taxed CFC income.

12.10.2017 German Tax and Legal News

Compulsory use under trademark law on basis of the Testarossa case - District Court ruled that Ferrari has to agree to the deletion of the Testarossa trademark

The maintenance of trademark protection for historic luxury brands requires a lasting and serious use

22.09.2017 German Tax and Legal News

Joint task force to examine tightening of RETT provisions

Certain states have launched an initiative to consider reducing the RETT threshold for share transfers from 95% to 75% or less

05.09.2017 German Tax and Legal News

Lower tax court rules change-in-ownership rules partially unconstitutional

Federal Constitutional Court now must rule on the issue

04.09.2017 German Tax and Legal News

Lower tax court upholds constitutionality of 6% interest rate applicable on tax payments during period 2011-2016

Case now pending before federal tax court

28.08.2017 German Tax and Legal News

Remaining payable of company in liquidation should not result in cancellation of debt income

Tax authorities’ guidance provides long-awaited clarifications

21.08.2017 German Tax and Legal News

BGH ruling on up- and cross-stream collaterals in groups - Time of provision relevant for § 30 GmbHG

BGH determines the relevant evaluation date for granting real collaterals within the scope of § 30 GmbHG on the provision date and not on the date of realization

21.08.2017 German Tax and Legal News

BMF Circular from July 11, 2017 related to Country-by-Country reporting in Germany

The German Federal Ministry of Finance published administrative principles on the “Requirements for the Country-by-Country Report”. This letter comprises a clarification of the Country-by-Country Report (“CbCR”) production and filing requirements within the meaning of Sec. 138a of the German General Tax Code (Abgabenordnung) and Action Point 13 of OECD BEPS.

31.07.2017 German Tax and Legal News

Revised anti-treaty shopping rules referred to CJEU

CJEU asked to rule on whether anti-treaty shopping rules are compatible with EU law

19.07.2017 German Tax and Legal News

Effect of unreasonable instructions - Inconsistent rulings of the Federal Labour Court

In the past, the Federal Labor Court (Bundesarbeitsgericht) ruled that even unreasonable directives by the employer were binding for the employee until a court adjudicated about the reasonableness and thus binding force of the directive. This jurisdiction might change.

06.07.2017 German Tax and Legal News

BFH rules on forfeiture of tax loss carryforward in share transfer to parties acting in concert

BFH decision conflicts with MOF guidance

05.07.2017 German Tax and Legal News

Participation rights of the works council in case of creating and running a Facebook page by the employer

By judgement of December 13, 2016 (1 ABR 7/15) the Federal Court of Employment Law has decided on the participation rights of a works council in case of creating and running of a Facebook page.

30.06.2017 German Tax and Legal News

The Platform for Collaboration on Tax issues a discussion draft Toolkit for Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analyses on January 2017

Responding to a request by the G20 Development Working Group on the impact of BEPS in Low Income Countries the Platform for Collaboration on Tax has developed a draft toolkit designed to assist developing countries in transfer pricing. Many developing countries report uncertainties and difficulties in conducting comparability analyses, in particular, the scarcity of the financial data necessary to carry out a comparability analysis.

21.06.2017 German Tax and Legal News

BFH rules again on VAT treatment of supplies via consignment stock

Supplies made by a Dutch BV to its German customer from consignment stock located in Germany do not qualify as intra-Community supplies and, therefore, are subject to VAT.

20.06.2017 German Tax and Legal News

New guidance issued on VAT grouping rules

Partnership businesses may be affiliated companies in a VAT group

16.06.2017 German Tax and Legal News

Compatibility of RETT intragroup exemption with EU state aid rules referred to CJEU

If CJEU concludes unlawful state aid is involved, the European Commission then will need to make a determination.

06.06.2017 German Tax and Legal News

Draft guidance issued on WHT on outbound payments for software and database usage

Draft aims to clarify an area of uncertainty

15.05.2017 German Tax and Legal News

Federal Constitutional Court rules change-in-ownership rules partially unconstitutional

Rules to be partially amended on retroactive basis

02.05.2017 German Tax and Legal News

Lower House passes bill to limit tax deductibility of royalty payments

Lower house also passes rule on restructuring profits

27.04.2017 German Tax and Legal News

Reporting to the Croatian Tax Authorities on the membership of a multinational group subject to the Country-by-country reporting requirements

The Croatian tax payers, members of the multinational groups that have consolidated revenues of min. EUR 750 Mio are obliged to inform the Croatian Tax Authorities about the group obligation for the submission of the Country-by-Country Reporting’s.

24.04.2017 German Tax and Legal News

The legal unity of a share transfer agreement and trust agreement

The nullity of the trust agreement can lead to the ineffectiveness of the legally linked share transfer agreement.

21.04.2017 German Tax and Legal News

Reform of the German Investment Tax Act: Federal Ministry of Finance publishes 1st draft of the circular

The German Investment Tax Reform Act published in the Federal Law Gazette on July 26, 2016 raises a great number of practical questions – notwithstanding the objective to simplify the taxation of investment income which has been emphasised during the entire legislative procedure. The draft circular released by the Federal Ministry of Finance aims to clarify some of these questions.

04.04.2017 German Tax and Legal News

Federal tax court clarifies application of dual consolidated loss rules

Dual consolidated loss rules apply only in the case of a loss at the consolidated group level, not at the entity level

29.03.2017 German Tax and Legal News

BFH denies trade tax addback for intermediary companies

Intermediary company only acted on behalf of other parties

29.03.2017 German Tax and Legal News

BFH rules tax authorities’ guidance providing waiver of tax on recapitalization gains is unconstitutional

Each case must be decided on its own merits

28.03.2017 German Tax and Legal News

New: Revision of the German Corporate Governance Code – Increased demands on Compliance Management Systems

The Government Commission has decided on amendments of the DCGK that lead to higher demands on Compliance Management Systems.

21.03.2017 German Tax and Legal News

The joint operation: Alternative to a supply of temporary workers?

On April 1, 2017, the AÜG reform comes into force. From this date on, a permanent use of temporary workers will no longer be possible.

20.03.2017 German Tax and Legal News

More wage justice by law – dealing with the new draft law

What is the essence of the draft Transparent Remuneration Law and what should employers consider already now?

17.03.2017 German Tax and Legal News

Germany – Turkey: Mutual Legal Assistance in foreign bribery offences

Provision of Mutual Legal Assistance in foreign bribery offences, examined within the framework of German – Turkish relations.

16.03.2017 German Tax and Legal News

Guidance issued on the automatic exchange of information and FATCA reporting

Official guidance covers the application of the automatic exchange of information under the CRS and FATCA

16.03.2017 German Tax and Legal News

“Drop-in registered letter” of Deutsche Post AG fulfills the formal requirements of the delivery per registered letter according to § 21 GmbHG

Redemption of shares in a German GmbH: drop-in registered letter fulfills the formal requirements of a registered letter according to sec. 21 GmbHG

14.03.2017 German Tax and Legal News

Final German Administrative Principles for the Profit Attribution to Permanent Establishments published

The guidance provides the German tax authorities’ opinion on the interpretation of the “Authorized OECD Approach – AOA” as outlined in Sec. 1 para. 5 German Foreign Tax Code and the Decree Law on the Attribution on Profits to Permanent Establishments.

06.03.2017 German Tax and Legal News

Germany publishes new draft legislation on Transfer Pricing Documentation

The German Federal Ministry of Finance recently published a discussion paper on the amendment of the Decree on the type, content and extent of the transfer pricing documentation.

23.02.2017 German Tax and Legal News

BFH requests preliminary ruling from CJEU on input VAT deduction on advance payments

Issues relate to the scope and interpretation of the CJEU decision in Firin

21.02.2017 German Tax and Legal News

BFH rules on organizational integration requirement and the need for a controlling company to be regarded as a taxable person for VAT grouping purposes

VAT Group – organizational integration can exist even if the management boards of the controlling and the affiliated companies are not identical

13.02.2017 German Tax and Legal News

Aggravated Dismissal Protection with regard to Severe Disability – Participation of the Representative Body is now essential

Missing participation of Representative Body for Severely Disabled Employees before notice of dismissal is given makes dismissal invalid.

08.02.2017 German Tax and Legal News

Bill to limit tax deductibility of royalty payments undergoing legislative process

Limit would apply to royalty payments made to recipients benefiting from non-nexus-based, low-taxed IP Regime.

03.02.2017 German Tax and Legal News

At a glance: Important information as of 1 January 2017 relevant for employers

As every year, 2017 has also important changes in the area of wage tax and the social security right. There are many small changes, which should be noticed. This article lists the most important changes you need to know for your current wage tax billing.

02.02.2017 German Tax and Legal News

Tax authorities issue guidance on filing deadlines for 2016 tax returns

The German tax authorities have issued their annual guidance on the filing deadlines for the 2016 tax returns. The filing deadline for these returns is May 31, 2017. In cases where the tax returns are prepared by an external tax advisor, the filing deadline is typically extended to December 31, 2017.

02.02.2017 German Tax and Legal News

BFH rules on VAT treatment of supplies via consignment stock

Supplies via call-off-stock can be zero rated intra-community supplies if certain conditions are fulfilled.

19.01.2017 German Tax and Legal News

Federal cabinet approves draft bill to combat tax avoidance

Taxpayers would be subject to increased duties to cooperate, and financial institutions would be subject to increased disclosure requirements

11.01.2017 German Tax and Legal News

Notice of termination by reason of secret recording of a staff appraisal - Confidentiality of the spoken word as a contractual accessory obligation

The State Labor Court of Rheinland-Pfalz had to decide on the consequences arising from a secret recording of a staff appraisal by using a smartphone

10.01.2017 German Tax and Legal News

BAG: No personal talk with sick employee - No written warning for sick employee

The employer cannot insist on a personnel talk with a sick employee

05.01.2017 German Tax and Legal News

BFH rules on correction of invoices with retroactive effect

Input VAT recovery from corrected invoice is available from time original invoice is issued

20.12.2016 German Tax and Legal News

Draft law published to limit deductibility of royalty payments

Limit would apply to royalty payments made to recipients benefiting from non-nexus-based, low-taxed IP regime

19.12.2016 German Tax and Legal News

BEPS measures and additional relief from change-in-ownership rules approved

CbC and master file reporting requirements and additional relief from general change-in-ownership rule introduced

19.12.2016 German Tax and Legal News

Brexit: Possible implications on German insurance tax

Under certain conditions, the German Insurance Tax Act (VersStG) levies an insurance premium tax (IPT) of 19% on certain insurance fees. The IPT is economically paid by the insured party, but the actual payment to the tax authority is usually made by the insurance company. However, depending on the outcome of negotiations regarding the “Brexit” the obligation pay the taxes might shift from the insurance company to the insured party.

09.12.2016 German Tax and Legal News

Tax loss carryback possible after harmful share transfer during the relevant fiscal year

Lower court decision conflicts with MOF guidance

25.11.2016 German Tax and Legal News

Market price in the presence of a monopsony (demand monopoly) of the Public Authorities

Even where a monopsony (demand monopoly) of the Public Authorities is given, there is room for establishing a market price within the meaning of public price law

23.11.2016 German Tax and Legal News

Lower Finance Court rules on VAT implications of installment-based agreements

If due date is more than two years after the supply, the installment may be treated as a bad debt so that full VAT liability would arise only after payment is received

21.11.2016 German Tax and Legal News

The new records of data processing activities: What are the requirements of the EU-GDPR?

EU General Data Protection Regulation: New legal requirements for the records of data processing activities

15.11.2016 German Tax and Legal News

Inability to work during exemption from work duties after dismissal - Instruction right with respect to compensation of extra hours

Deduction of extra hours in case of an exemption from the work duties during dismissal notice period remains unaffected by later inability to work

15.11.2016 German Tax and Legal News

Avoidance of possible damage claims for expired holidays

Granting holidays prior to the end of the year is worth considering

07.11.2016 German Tax and Legal News

The membership information rights of the limited partner

The extraordinary information right of the limited partner is to be differentiated from the right to review the annual financial statement and can also serve to verify the business activities of the general partner.

31.10.2016 German Tax and Legal News

Amendments to the EU-ATAD suggested to cover hybrid mismatches with third countries

The European Commission issued a proposal for an amendment to the EU ATAD (Anti Tax Avoidance Directive). It is targeting hybrid mismatches with third countries and would require Member States to enact domestic legislation by 31 December 2018 at the latest.

19.10.2016 German Tax and Legal News

Reform of German zoning laws – Urban Area

The Urban Area – A solution for overheated housing markets?

18.10.2016 German Tax and Legal News

CJEU rules on timing of input VAT deduction on corrected invoice

Input VAT recovery from corrected invoice already available from time original invoice issued

11.10.2016 German Tax and Legal News

Lower tax court upholds constitutionality of interest rate applicable on tax payments

Lower tax court of Duesseldorf considers the interest rate of 6% per annum during 2013 to be in line with constitutional principles

27.09.2016 German Tax and Legal News

New law against corruption in healthcare - What should be taken into consideration by pharmaceutical sector and doctors in the future

The practices of hospitals/doctors, e.g. “sponsoring” or “referral bonuses” require a critical review according to the new corruption law.

23.09.2016 German Tax and Legal News

Upper house proposes anti-double deduction rule for partnership structures

Proposal to be included in BEPS implementation act

16.09.2016 German Tax and Legal News

BFH rules on RETT on share deals

BFH rules RETT should be triggered only at the time an SPA is signed, not where contractual rights are assigned in a share deal.

09.09.2016 German Tax and Legal News

Corporate structuring projects and the Brexit – Time to act now? Potential Brexit consequences you need to be aware of

The Brexit will affect cross-border restructurings relating to the UK – we show you the changes you can expect.

08.09.2016 German Tax and Legal News

Legal consequence of concealed temporary personnel leasing

A sham contract for work between lender and hirer does not necessarily lead to an invalid temporary personnel leasing.

06.09.2016 German Tax and Legal News

Duty of members of the supervisory board to keep information confidential - No attribution of knowledge to represented company

The duty of a member of the supervisory board to keep information confidential also applies vis-a-vis the company that he/she represents in the supervisory board; the knowledge cannot be attributed to the company.

06.09.2016 German Tax and Legal News

Draft law proposes additional relief from change-in-ownership rules

Continuation of same business operations would allow use of NOL carryforwards after a harmful change-in-ownership

05.09.2016 German Tax and Legal News

Land tax reform proposed

Reform would result in a fundamental restructuring of taxation of real estate

05.09.2016 German Tax and Legal News

Redemption of shares in a German GmbH and remaining shareholders’ contingent liability for compensation payments

Contingent liability of shareholders according to the BGH rulings dated 24 January 2012 and 10 May 2016 - Contingent liability of shareholders for compensation payments to exiting shareholder

05.09.2016 German Tax and Legal News

BFH confirms relationship between tax treaty provisions and tax treaty override rule in domestic tax law

Treaty override provisions apply to treaties that entered into force after the treaty override provisions were introduced

24.08.2016 German Tax and Legal News

CJEU asked to rule on whether mandatory rebates granted to private health insurances should be considered a discount for VAT purposes

The differing VAT treatment applied by the German tax authorities to mandatory rebates to private and public health insurers may not be in line with the EU Charter of Fundamental Rights

08.08.2016 German Tax and Legal News

Statutory changes to sec. 309 no. 13 German Civil Code - Impact on Forfeiture Regulations in Employment Contracts

Changes to sec. 309 no. 13 German Civil Code as of October 2016 require amendment of forfeiture regulations in employment contracts.

29.07.2016 German Tax and Legal News

Brexit: “German” Limited – unlimited? Liability risks for shareholders in a „German“ Limited

The Brexit may lead to significant liability risks for shareholders of a UK Limited in Germany.

29.07.2016 German Tax and Legal News

Court ruling on regulations applicable to cross-border relocations - Regulations of the German Reorganization Act decisive

The SE Regulation does not apply to a cross-border relocation with conversion of a French S.à r.l. into a German GmbH.

26.07.2016 German Tax and Legal News

Subscriber’s rescission in case of a failed share capital increase - Company’s obligation to facilitate a speedy execution of the increase

The subscriber of a share capital increase has a right of rescission in case the capital measure is not executed within a reasonable period.

26.07.2016 German Tax and Legal News

Extension of a contract with the managing director - The necessity of the approvals of shareholders' meetings

Approval of the contract extension with a managing director by the shareholders' meetings

11.07.2016 German Tax and Legal News

Potential impact of EU anti-tax avoidance directive on domestic German tax law

The EU ATAD is expected to have an impact on German tax law, even if Germany seems to have delivered on the blueprint for several measures

11.07.2016 German Tax and Legal News

The transfer of shares by way of anticipated inheritance leads to forfeiture of losses carried forward

The Financial Court of Muenster (FG Muenster) had to decide whether the transfer of more than 50% of the shares in a GmbH by way of anticipated inheritance leads to the forfeiture of the losses carried forward in the sense of sec. 8c of the German Corporate Tax Act (KStG). In its ruling of 4th November 2015 (9 K 3478/13 F), the Financial Court of Muenster confirmed the forfeiture of the losses carried forward in such a case.

05.07.2016 German Tax and Legal News

Denial of the notarization of the incorporation of a German GmbH by a Swiss notary - No equivalence of Swiss notarization procedures

No legally effective incorporation of a German GmbH in case of notarization by a Swiss notary

05.07.2016 German Tax and Legal News

Brexit: Majority of British Electorate Votes to Leave EU

On June 23, 2016, the majority of British voters decided to leave the EU, however this will not happen immediately. In the next few months and probably years negotiations will take place between the EU and Great Britain on their relationship after the exit. During this negotiation period, companies should keep an eye on the related fiscal and legal issues.

16.06.2016 German Tax and Legal News

Extent of Claim by the Works Council to Communication Technology

German Federal Labor Court Negates Claim to Separate Telephone Line and Internet Connection / Works Council Activity Justifies a Claim to Communication Technology, but not to a Separate Telephone Line and Internet Connection

16.06.2016 German Tax and Legal News

Private home of co-shareholder as the place of a shareholders‘ meeting

Recent decision of the German Federal Supreme Court - German Federal Supreme Court decides on validity of shareholders’ resolutions adopted in private home of co-shareholder

13.06.2016 German Tax and Legal News

German Act on Power Market 2.0: European Commission approves German plan to phase-out certain lignite-fired power plants according to EU state aid rules

On May 27, 2016 the European Commission (EU COM) has decided upon the state aid implications of the German legislator’s plan to phase-out certain lignite-fired power plants by compensating the plant operators for putting the plants into a security reserve for a period of four years. The compensation worth € 1.6 in total does not violate EU state aid rules.

09.06.2016 German Tax and Legal News

Draft tax law includes BEPS measures incl. country-by-country reporting requirements

Germany to introduce CbC reporting requirements and obligation to prepare master file

09.06.2016 German Tax and Legal News

No retroactive taxation of upstream merger involving tainted shares

An upstream merger does not fulfill all of the criteria of a disposal due to lack of consideration from the perspective of the transferring entity

02.06.2016 German Tax and Legal News

Preclusion of the corporate regulatory fine after a voluntary disclosure

Voluntary disclosure protecting corporate bodies against criminal prosecution and enterprises against regulatory fines.

30.05.2016 German Tax and Legal News

German Federal Court of Justice: Liability of a Director of UK-Limited for payments resulting in a reduction of insolvency assets pursuant to German law

The director of a UK Limited can also be liable for payments made after insolvency pursuant to Sec. 64 German Limited Liability Companies Act.

30.05.2016 German Tax and Legal News

MOF decree emphasizes importance of tax compliance management system

The existence of a Tax CMS can affect whether a taxpayer can be charged for willful or grossly negligent failure to comply

27.05.2016 German Tax and Legal News

Shift to full-time work does not increase the acquired leave entitlement

Wechsel von einer Teilzeittätigkeit zu einer Vollzeittätigkeit erhöht nicht den während der Teilzeittätigkeit erworbenen Urlaubsanspruch

25.05.2016 German Tax and Legal News

European Commission refers Germany to CJEU regarding implementation of TOMS rules

German tour operator margin scheme not in line with EU VAT law?

18.05.2016 German Tax and Legal News

Germany’s Federal Fiscal Court rules its first case regarding Guaranteed Payments

The application of subject-to-tax clauses was not decisive but the allocation of taxation rights under article 14 of the former Double Tax Treaty between the US and Germany based upon individual partner’s services performance

10.05.2016 German Tax and Legal News

Risk of liability: Account warranties in German M&A deals - German Court decides on warranty claims

Sellers‘ liability under accounts warranty in German M&A deals may be extensive and include unknown liabilities

10.05.2016 German Tax and Legal News

Evidence of power of representation of the director of a UK PLC - Mere inspection of Companies House is not sufficient

Comprehensive certificate of a UK notary as proof of authority of a director of a UK PLC towards German commercial register

27.04.2016 German Tax and Legal News

Proposal for a Directive on European single-member companies

Improvement of opportunities for cross-border activities of companies

26.04.2016 German Tax and Legal News

BFH rules on VAT treatment of transfers of co-ownership shares in goods

Transfer of co-ownership shares in goods may be considered a supply of goods potentially qualifying for the VAT exemption for intra-community supplies

20.04.2016 German Tax and Legal News

Tax auditors instructed not to apply recent BFH decisions on impaired intercompany loans in similar circumstances

The Ministry of Finance has published a notice instructing tax auditors not to apply recent decisions, in which the BFH held that article 9 of the OECD model tax treaty overrides the interpretation of the arm’s length principle under German domestic tax law.

12.04.2016 German Tax and Legal News

Dismissal due to Excessive Private Use of Internet

Evaluation of Browser History without Consent of Employee

11.04.2016 German Tax and Legal News

Federal Constitutional Court rejects complaint against trade tax addback

The court’s decision was based on procedural grounds.

30.03.2016 German Tax and Legal News

New guidance published on VAT treatment of supplies via consignment stock

OFD Frankfurt updates guidance following tax court decisions

30.03.2016 German Tax and Legal News

CJEU rules on VAT treatment of payments for unused airline tickets

VAT is due on airline tickets even where the passenger does not use the ticket

30.03.2016 German Tax and Legal News

BFH rules on input VAT recovery by management holding companies and on partnerships in a VAT group

An active holding company generally can recover input VAT and partnerships may be a controlled company in a VAT group

30.03.2016 German Tax and Legal News

Lower Finance Court of Cologne rules on conditions for obtaining a VAT refund under the special refund procedure for EU residents

Submission of scanned invoice copies is sufficient for input VAT refund under the special refund procedure for EU residents

30.03.2016 German Tax and Legal News

BMF issues guidance on input VAT refund claims of nonresident businesses

BMF clarifies conditions for input VAT refund from invoices for intra-community supplies or export supplies

17.03.2016 German Tax and Legal News

State of Thuringia to increase RETT rate

RETT rate will increase from 5% to 6.5% on 1 January 2017

17.03.2016 German Tax and Legal News

Tax authorities issue guidance on filing deadlines for 2015 tax returns

The German tax authorities have issued their annual guidance on the filing deadlines for the 2015 tax returns. The filing deadline for these returns is May 31, 2016. In cases where the tax returns are prepared by an external tax advisor, the filing deadline is typically extended to December 31, 2016.

11.03.2016 German Tax and Legal News

Federal Constitutional Court agenda for 2016

The Federal Constitutional Court recently published the issues that it will address during 2016

02.03.2016 German Tax and Legal News

EGC rules exception to change-in-ownership rule qualifies as unlawful state aid

The EU General Court has confirmed the decision of the European Commission that the Sanierungsklausel constitutes State aid

29.02.2016 German Tax and Legal News

BFH asks Federal Ministry of Finance to opine on whether RETT intragroup exemption constitutes state aid

RETT intragroup restructuring clause could constitute unlawful state aid under EU principles

23.02.2016 German Tax and Legal News

Partnership can be controlled party in a VAT group. German VAT group in line with the EU provisions? Nontaxable persons cannot be the controlling entity of a VAT group

The Federal Tax Court has ruled that partnerships may be a controlled company in a VAT group in certain cases. Nontaxable persons may not participate in such a group as controlling entity.

23.02.2016 German Tax and Legal News

CJEU AG opines invoice corrections may have retroactive effect for input VAT deduction

AG questions German provisions deferring deduction of input VAT in case of invoice corrections.

19.02.2016 German Tax and Legal News

Constitutional court rules treaty override provision in line with the constitution

Legislature can introduce treaty override provisions that secure German taxation rights

16.02.2016 German Tax and Legal News

BFH refers constitutionality of interest deduction limitation rule to constitutional court

Decision of the constitutional court may take years

16.02.2016 German Tax and Legal News

Tax Amendment Act 2015

The amendments apply as from 6 November 2015.

12.02.2016 German Tax and Legal News

MOF plans stricter monitoring of energy and electricity consumption

The MOF has published a draft of new transparency rules for the energy and electricity tax, as well as changes to the energy and electricity tax ordinance.

27.01.2016 German Tax and Legal News

At a glance: Important information as of 1 January 2016 relevant for employers

This year we miss the highlight of changes in the area of the wage tax and the social security right. A huge number of smaller changes should be noted. In this article, you will find the most important changes you need to know for the current wage tax billing.

22.01.2016 German Tax and Legal News

BMF issues guidance on triangular leasing relationships

Determination of the parties of a supply of assets for leasing purposes depends on the contractual agreements

22.01.2016 German Tax and Legal News

BMF clarifies VAT treatment of split transports

Split transport transactions can be treated as direct supplies to the final destination provided that the customer is already identified at the commencement of the shipment

22.01.2016 German Tax and Legal News

AG questions German standard allocation key of pro rata input VAT deduction for mixed use buildings

Standard use of other than turnover based allocation key not in line with EU VAT Directive

18.01.2016 German Tax and Legal News

New tax treaty with Netherlands applies as from 1 January 2016

New real estate clause will affect inbound investors

06.01.2016 German Tax and Legal News

Local tax court clarifies requirement for early termination of tax group

Intragroup restructuring may constitute an important reason for terminating tax consolidation before the end of the minimum five-year period

14.12.2015 German Tax and Legal News

Local tax court confirms conditions for RETT intragroup restructuring exception

Five-year pre-restructuring period not required for newly set up companies

01.12.2015 German Tax and Legal News

Minimum shareholding for participation exemption for capital gains from the sale of shares unlikely to be introduced

New draft of investment tax act likely not include a minimum shareholding requirement

27.11.2015 German Tax and Legal News

BFH rules on requirements for company addresses on invoices

The BFH´s ruling on requirements for addresses on invoices now prohibits the mere use of a P.O. box.

27.11.2015 German Tax and Legal News

BFH rules on place of supply for low value consignments

The place of supply for VAT purposes might be in Germany in the case of imports of small consignments, even if the supplier acts on behalf of the final customer

27.11.2015 German Tax and Legal News

Lower tax court of Munich rules on VAT invoice requirements for triangular supplies

The court has ruled that the German invoicing regulations in case of triangular supplies exceed the requirements in the EU VAT directive

26.11.2015 German Tax and Legal News

CJEU rules on VAT treatment of bitcoins

The exchange of traditional currency for units of bitcoin, and vice-versa, is exempt from VAT

22.10.2015 German Tax and Legal News

CJEU rules on VAT exemption for provisioning of seagoing vessels via intermediaries

The CJEU has ruled that the VAT exemption for the supply of fuel to seagoing vessels may be applied to intermediaries for supplies made before the last stage of the supply chain.

22.10.2015 German Tax and Legal News

BMF issues new guidance on conditions for refund of incorrectly charged VAT

BMF clarifies that refund of incorrectly charged VAT by the tax authorities requires the repayment of the amount to the recipient

25.09.2015 German Tax and Legal News

Discussion draft on amendments to domestic participation exemption for portfolio investments

A proposal has been issued that would abolish the participation exemption for German corporate shareholders’ capital gains from portfolio shareholdings.

18.09.2015 German Tax and Legal News

CJEU confirms 10-year deferral rule for German exit taxes under old administrative guidance

In the Verder LabTec case (C-657/13), the CJEU confirmed that German exit tax rules granting a 10 year deferral are principally in line with EU law

15.09.2015 German Tax and Legal News

Lower tax court clarifies change-in-ownership rules

Lower tax court rejects tax authorities’ interpretation of the definition of parties acting in concert in the change-in-ownership rules

15.09.2015 German Tax and Legal News

Lower tax court denies full participation exemption for dividends under tax treaty

Lower tax court confirms the tax authorities approach of only granting a 95% participation exemption for dividends under a DTT

31.08.2015 German Tax and Legal News

MOF clarifies Organschaft rules for atypical silent partnerships

A new circular clarifies and confirms the MOF position on the treatment of atypical silent partnerships under the tax consolidation rules

25.08.2015 German Tax and Legal News

Intrastat reporting threshold for arrivals to be raised to EUR 800,000

As from January 1, 2016, the Intrastat reporting threshold for arrivals will be increased from EUR 500,000 to EUR 800,000; the threshold for dispatches will remain unchanged.

25.08.2015 German Tax and Legal News

BMF issues guidance on VAT treatment of security held in the construction industry

The guidance limited application to situations where full payment is received significantly later than the date of the supply to security held within the construction industry

07.08.2015 German Tax and Legal News

RETT burden to increase

The Federal Constitutional Court has issued a decision that will have significant impact on RETT taxation.

22.07.2015 German Tax and Legal News

CJEU rules on VAT deduction of a holding company

Input VAT incurred by a holding company on the acquisition of shareholdings in subsidiaries should be fully recoverable provided the holding actively manages the subsidiaries and makes no exempt supplies.

22.07.2015 German Tax and Legal News

BFH rules on VAT treatment of a transfer of a going concern to a group of purchasers

No transfer of a going concern occurs where a business is transferred as a whole to a group of purchasers if each separate transaction involved in the transfer does not fulfill the criteria for of a transfer of a going concern.

22.07.2015 German Tax and Legal News

Lower tax court rules on VAT treatment of mandatory rebates granted to private health insurances which should not be considered as a discount for VAT purposes

Mandatory rebates issued by pharmaceutical manufacturers to public health insurances should not be considered as discounts for VAT purposes if granted to private health insurances.

20.07.2015 German Tax and Legal News

Federal state Brandenburg increases real estate transfer tax rate

RETT rate increased from 5% to 6.5%

16.07.2015 German Tax and Legal News

BFH introduces new doctrine on subordination agreements

The BFH has confirmed its opinion regarding the required wording of subordination agreement and introduced a new doctrine regarding the consequences for failure to include the required wording.

13.07.2015 German Tax and Legal News

Is There a Need for a Special Law on General Terms and Conditions for Companies?

The German law on general terms and conditions is very strict – even in b2b relations. Is that up-to-date?

13.07.2015 German Tax and Legal News

Reform of Insolvency Law – Greater Legal Certainty for Suppliers of Business Partners in Insolvency

The reform of the insolvency law focusses on changes regarding the avoidance law – a more supplier-friendly law might come.

13.07.2015 German Tax and Legal News

German Government Draft Bill to Amend the Stock Corporation Act

A new try – the German Government presents a draft bill to amend the AktG. We inform you about the main topics of the draft bill.

13.07.2015 German Tax and Legal News

A Revolution in Employee Participation in the Supervisory Board?

The Regional Court of Frankfurt/Main has taken a very progressive decision on the decisive shareholders for the applicability of a German co-determination which could lead to a complete new situation for most of the German groups of companies.

13.07.2015 German Tax and Legal News

German Federal Court of Justice: Post Contractual Customer Protection Clauses for Shareholders of Limited Liability Companies exceeding a period of two years are void

The BGH recently made an important ruling on the term for customer protection clauses.

13.07.2015 German Tax and Legal News

Determining Social Criteria for Dismissals for Operational Reasons with an Option of Altered Conditions of Employment

In case of termination of an employment relationship in Germany within the applicability of the German Unfair Dismissal Act, the social criterias are to be considered carefully.

13.07.2015 German Tax and Legal News

Consequences for Business Practice from the Middelhoff Decision by the Regional Court in Essen

The spectacular case against the former chairman of the board of directors of Arcandor Group again shows the monetary and penal consequences a legal representative might face.

13.07.2015 German Tax and Legal News

Legal requirements for qualified subordination agreements

In its decision dated 5 March 2015 (case IX ZR 133/144) the German Federal High Curt (Bundesgerichtshof - BGH) ruled on the legal nature of qualified subordination agreements as well as to the legal requirements. The ruling, referring to a highly disputed restructuring instrument, will have significant consequences for the practice.

13.07.2015 German Tax and Legal News

European Court of Justice: Liability for Administrative Offenses and Fines by the Company Being Acquired in the Event of Mergers by Acquisition

The ECJ made an important ruling which also affects the interpretation of national provisions concerning mergers and leads to a higher risk of the absorbing entity.

03.07.2015 German Tax and Legal News

Local court rules on five-year minimum term of PLTA in retroactive spinoff

The local tax court of Düsseldorf has ruled that the five- year minimum term of a PLTA is not met if the subsidiary was not in existence for the entire period. The retroactive effect of reorganization is disregarded in determining the term of a PLTA.

23.06.2015 German Tax and Legal News

Guidance issued on VAT place of supply rules applicable to conferences

The BMF has clarified that the place of supply rules applicable to trade fairs and exhibitions also apply to conferences.

23.06.2015 German Tax and Legal News

Import VAT deduction denied where warehouse keeper lacked authority to dispose of stored imported goods

The tax court stated that the authority to dispose of the goods is a mandatory condition to be entitled to deduct import VAT.

23.06.2015 German Tax and Legal News

VAT “rounding rule” referred to CJEU

The Tax Court of Muenster has asked the CJEU to verify the applicable rounding provisions on the German pro rata rate.

22.06.2015 German Tax and Legal News

Lower tax court denies deemed dividend treatment on related party loan

The lower tax court of Baden Wuerttemberg has denied deemed dividend treatment as a result of a write-off of a loan receivable in a related party situation.

27.05.2015 German Tax and Legal News

Limits on use of non-EU company cars of cross-border commuters within the EU

As from May 2015, non-EU-registered company cars no longer may be used by cross-border commuters for private purposes in the EU without customs clearance.

27.05.2015 German Tax and Legal News

Principle of VAT neutrality prevails over domestic rules

The CJEU has ruled that VAT neutrality is a basic principle of EU VAT harmonization and this principle cannot be restricted by the domestic law of the EU member states.

27.05.2015 German Tax and Legal News

13th directive VAT refund claim rejected because of delayed submission of invoices

A non-EU established company must submit original invoices to the German tax authorities within a specified period for to obtain a refund of input VAT.

21.05.2015 German Tax and Legal News

Federal Constitutional Court agenda for 2015

The Federal Constitutional Court recently published the issues that it will address during 2015

19.05.2015 German Tax and Legal News

BFH rules CFC income is exempt from trade tax

The BFH has ended a long-standing controversy by ruling that passive income of a wholly-owned low-taxed foreign subsidiary that is covered by German CFC rules is not subject to trade tax because it is deemed income of a foreign PE.

19.05.2015 German Tax and Legal News

Germany: Accrual-based tax accounting obligatory for partnerships

Germany’s Federal Tax Court (BFH) issued a decision on December 10, 2014 on the obligation of foreign entities - specifically partnerships - to determine income on an accruals basis.