Newsletters

Factor’s liability for the VAT in a factored debt

The German Federal Tax Court has decided in its judgement dated December 16, 2015, that a factor’s liability for the VAT in a factored debt does not cease with the surrender of the proceeds of the debt collection to the original creditor. The German Federal Tax Court confirmed the factor’s joint and several liability for the lost VAT.

Note: This newsletter is only available in German language.
Distribution of deemed dividend pursuant to German CFC rules 100 % tax-free?

In contrast to the view of the German tax authorities, the Tax Court of Bremen ruled on October 15, 2015, that distributions made from earlier taxed deemed dividend pursuant to the German CFC rules will have to be treated as tax-exempt income for corporate investors according to paragraph 3 no. 41 of the German Income Tax Act. Paragraph 8b section 5 of the German Corporate Tax Act will not apply, so that double taxation will be avoided. This court decision is in line with the spirit and purpose of the CFC rules, which should only hinder the shielding or deferral of income by using a low-taxed foreign corporation (CFC company) but not generate an additional tax burden for German tax payers. The different view of the German tax authorities under which the distribution falls under paragraph 8b section 5 of the German Corporate Tax Act results in a double taxation of 5 % of such distribution. The tax authorities appealed the decision of the Tax Court of Bremen and the case will now have to be decided by the Supreme Court.

Note: This newsletter is only available in German language.
New Investment Regulation for the Guarantee Assets

In September 2015, the German Federal Ministry of Finance published the draft of several regu­lations relating to the insurance industry. Said regulations, one of which was the Investment Regulation for the investments of German insurance companies, had to be amended and restated due to the transposition of Solvency II into German law. On 21 April 2016, the Regulation on the Investment of the Guarantee Assets of Pensionskassen, Death Benefits Funds (Sterbekassen) and Small Insurance Companies (Anlageverordnung) dated 18 April 2016 was published (together with other amended regulations) in the German Federal Gazette. It entered into force on 22 April 2016.

Note: This newsletter is only available in German language.
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