Our Client Newsletter
We follow our industry's important developments in proposed legislation, administrative and court decisions as well as in the market. We analyze issues of particular interest and regularly publish our analysis and conclusions in client newsletters that we promptly distribute via email.
German Fiscal Court on Sec. 6a of the German Real Estate Transfer Tax Act: Broad interpretation due to national law but potentially prohibited state aidAug. 15, 2017
With its decision dated 30 May, 2017, the German Federal Fiscal Court referred to the European Court of Justice (“ECJ”) several questions on the potential state aid qualification of the tax exemption according to Sec. 6a of the German Real Estate Transfer Tax Act. This provision – under specific circumstances – exempts group restructurings involving property holding companies, which as such generally qualify as a taxable acquisition under the German Real Estate Transfer Tax Act, from taxation.
Newsletter, Aug. 15, 2017 (PDF)
German Fiscal Court on Funds and Equal Treatment Under the EU FreedomsJuly 18, 2017
Under the current tax regime Germany grants a tax exemption only for domestic funds but not for foreign funds. The Fiscal Court Münster (20/04/2017,10 K 3059/14 K) ruled that this does not violate the EU freedoms because the situation of German funds is not comparable to that of foreign funds.
In the case at hand a foreign real estate fund (a Luxembourg fonds commune de placement,or FCP) holds German real estate directly. The foreign fund claimed that it should be exempt from German tax on the rental income. It argued that because of the tax exemption granted to a German domestic fund, a Luxembourg fund should be granted the same treatment and thus receive the same tax exemption privilege.
Newsletter, July 18, 2017 (PDF)
Cadbury Schweppes CFC privilege also for non-EU companies?July 4, 2017
The German Federal Tax Court decided whether the German CFC rules also apply to foreign companies located outside the European Union. Whereas the German CFC legislation, in the case of companies located within the European Union, provides for an exemption if the foreign company can prove "real economic activity", such an exemption is not granted to companies located outside the European Union. The German Federal Tax Court believes that this may be contrary to the principle of free movement of capital. The Court therefore puts this question to the European Court of Justice.
Newsletter, July 4, 2017 (PDF)
German Civil Court: Administration Fees for a German FundJune 22, 2017
The Bundesgerichtshof (German Federal Civil Court) decided on whether a fund manager may ask for an administration fee in addition to the management fee. As far as banks are concerned, this practice by and large has been found to be not in line with German law. The Court now ruled that the same is not true in a fund context. Under German investment law, a fund manager has a right to be reimbursed for reasonable expenses incurred in the best interest of the fund. This right exists side-by-side with the management fee to which a fund manager is entitled. However, the Court's decision makes it clear that reimbursement clauses are only for covering costs and not for providing an additional profit margin to the fund manager.
Newsletter, June 22, 2017 (PDF)
Implementation of the Multilateral Instrument in Germany and LuxembourgJune 21, 2017
In our beinformed dated 19 January 2017, we addressed the multilateral instrument (MLI) of the Organisation for Economic Co-operation and Development (OECD). As a part of the BEPS (Base Erosion and Profit Shifting) project of the OECD, the MLI is meant to adopt and synchronize existing double tax treaties which are – according to the OECD – one of the major drivers of inappropriate tax avoidance strategies by abusing different tax treaties jurisdiction (“treaty shopping”). With the help of the MLI, adjustment processes of double tax treaties will be reduced significantly. After the first draft of the MLI was confirmed on 24 November 2016, ministers and other high-level representatives of over 60 states signed the international treaty on 7 June 2017 in Paris. Our beinformed illustrates the implication of the MLI in Germany and Luxembourg.
Newsletter, June 21, 2017 (PDF)