The German Federal Fiscal Court recently held that a treaty override by German tax law may be unconstitutional. The court believes that national laws may not override double tax treaties unless there is a justifiable reason. This recent decision is in direct contradiction with past legal tradition. 

On 23 April 2012, Germany and Luxembourg signed a new income and capital tax treaty. The new double tax treaty will replace the existing double tax treaty which was concluded in 1958. The new double tax treaty will apply after confirmation by parliament but not before 1 January 2013.

Some highlights for your business and some important deviations from the existing rules are summarized in this newsletter.