Germany’s Anti-Treaty-Shopping Rule under ECJ Pressure

Abstract

This article describes recent events surrounding the German anti-treaty-shopping rule enshrined in section 50d(3) of the German Income Tax Act. Designed to counteract tax planning strategies aimed at benefiting from lower withholding taxes under tax treaties or European directives, its future has been cast into grave doubt. These doubts arise both from domestic developments around possible planning strategies not within the scope of the rule and pressure from ECJ decisions. It is doubtful whether or not the rule will survive in its current form.