We previously informed you about a lower German tax court decision on distributions made from previously taxed deemed dividends pursuant to the German CFC rules (see beleuchtet dated 18 May 2016). In contrast to the view of the German tax authorities, the Tax Court of Bremen ruled on October 15, 2016, that such distributions made from previously taxed deemed dividends 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 does not apply so that double taxation can be avoided. The German Supreme Court now overruled the decision of the lower Tax Court of Bremen and followed the German tax authorities' view: 5% of such distributions made from previously taxed deemed dividends pursuant to the German CFC rules are subject to corporate income tax.