German Tax and Legal News

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

27.07.2022 German Tax and Legal News

BMF publishes draft on new business function relocation ordinance

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.

11.06.2019 German Tax and Legal News

BFH delivers long-awaited decision on taxation of carried interest from business-type fund structures

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.

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.