On 26 March 2010, the German Bundesrat ratified the Act Regarding the Implementation of EC Tax-Law Guidelines Including Further Tax Regulations (Gesetz zur Umsetzung steuerrechtlicher EU-Vorgaben sowie weiterer steuerrechtlicher Regelungen).

The act is based on several decisions of the European Court of Justice published in 2009 which dealt with topics such as deductibility of donations Continue →

On 18 March 2010 the European Commission has initiated official treaty violation proceedings against Germany. According to the Commission, the anti-malpractice guidelines of Germanys Section 50d (3) EStG violates several liberties established in the EU treaty.

Section 50d (3) EStG was established to hinder taxpayers who have none or no complete titles for exemption of German withholding taxes from achieving such exemption by improperly interposing a foreign enterprise. Such an improper formation exists if

Ø There is no economical or otherwise apparent reason for the interposition of a foreign enterprise

Ø The foreign enterprise obtains not more than 10% of its entire gross proceeds in the concerned year from its own business activity or

Ø The foreign enterprise does not hold suitable business operations for its corporate objective to use them to participate in the general economic commerce.

The criticism of the commission was especially focused on the fact that there can very well be sufficient business activity below the 10% threshold. The Commission thus claims that there has to be a possibility of providing counter evidence to prove a foreign enterprise’s legitimacy.

On 4 March 2010, the German Federal Constitutional Court announced a decision from 27 January 2010 regarding the German trade tax (Gewerbesteuer).

The plaintiffs, two German municipalities located in the German state of Brandenburg, challenged a 2004 amendment to the German trade tax law which obligates municipalities to assess a minimum trade tax. The Federal Constitutional Court rejected the municipalities’ claim and held the regulation to be in conformance with the German constitution. Continue →