Fiscal Courts Research Articles

Auswirkungen der Neuregelung zur nachgelagerten Besteuerung

Abstract In 2021, the Federal Fiscal Court pointed out to the legislator that future pensioners could be affected by potential double taxation due to deferred taxation. The Growth Opportunities Act passed in April 2024 now implements a flat-rate solution to avoid double taxation, extending the transition period until 2058. The results show, based on generational accounting, that this flat-rate solution has little impact on the sustainability of public finances. However, it leads to a considerable intergenerational redistribution at the expense of future generations.

Are Flat Rate Adjustments of the Customs Value Possible on the Basis of a Transfer Price Arrangement?: Judgment of the German Federal Fiscal Court in ‘Hamamatsu’ following the ECJ Judgment C-529/16

Are Flat Rate Adjustments of the Customs Value Possible on the Basis of a Transfer Price Arrangement?: Judgment of the German Federal Fiscal Court in ‘Hamamatsu’ following the ECJ Judgment C-529/16

Das Politische der Gemeinnützigkeit: Das Vereinsrecht zwischen Steuerrecht, Gefahrenabwehr und Antidiskriminierung

Private associations (<italic>Vereine</italic>) have recently become the object of increasing regulation in Germany from very different directions. The grounds for prohibiting extremist associations were expanded following the September 11, 2001 attacks, which caused a rise in prohibitions. Still more associations are today subject to surveillance by the offices for the protection of the constitution. In addition, the Federal Fiscal Court tightened the limitations for political engagement by charitable organizations in recent years. They clarified that charitable bodies may not get involved in political action beyond the scope of their official purpose as defined in their bylaws. Also, several courts denied privileged tax status to associations who do not allow women full access to their activities, or simply forced them to open all activities to all sexes. In the wake of these rulings, many NGOs, associations and other bodies fear for the many, often vital, tax advantages that come with their charitable status. This article analyzes these developments from a constitutional point of view and contrasts them with the jurisprudence on the freedom of association of the European Court of Human Rights and the German Constitutional Court. Arguably, the strict dichotomy which especially the fiscal courts establish between political parties and charitable associations does not stand up to scrutiny under constitutional law. European and German constitutional provisions view associations as necessary participants in the public discourse of a pluralist democratic order. These constitutional regimes appropriately acknowledge the important role associations, NGOs, corporations, and charitable foundations play in articulating, aggregating, and channeling the public will.

Forum: Case C-368/21: A New Definition of Importation in the Sense of VAT Law?

Since the Eurogate II and DHL decision (CJEU, Judgment of 2 June 2016, EU:C:2016:405), it has been clear that importation in the VAT context means ‘the entry of goods into the economic network’ of the Union. However, it is problematic that neither the EU VAT Directive nor the CJEU provide a distinct definition of what is meant by this term. This article deals with the main existing theories on the interpretation of this indeterminate legal concept in the German-language literature and by the German fiscal courts. It is concluded that these theories unfortunately ignore the exposed consumption tax character of (import) VAT and therefore deliver inconsistent results in contradiction to the recent decisions of the CJEU. importation, import VAT, customs, economic network, economic cycle, consumption tax, EU VAT Directive

THE PRINCIPLE OF JURISDICTIONAL AUTONOMY OF A COURT ADJUDICATING IN A CRIMINAL FISCAL CASE IN THE JUDICIAL PRACTICE OF ORDINARY AND ADMINISTRATIVE COURTS

In cases of fiscal offences and fiscal transgressions, an element of evidence in a case is often a tax decision issued in tax proceedings conducted against a person who acts as a defendant in a penal fiscal proceedings. As a result, a question arises as to the evidentiary value of such a decision, which was issued for the purposes of tax proceedings and not criminal fiscal proceedings. In particular, an important question is whether the criminal fiscal court is bound by the findings included in such a decision? An additional problem for the issue addressed is the question, whether between tax and penal fiscal proceedings there is any kind of preliminary relationship, which makes the examination of a penal fiscal case dependent on the prior tax decision issued by a relevant tax administration authority. The analysis of the jurisdiction of common and administrative courts does not allow for an excplicit answer in this respect, which led the authors to take up the presented issue and to formulate de lege lata conclusions, related also to the need to unify the jurisdprudence. The paper also discusses the principle of free assessment of evidence in the context of characterising a tax decision (of both, constitutive and declaratory nature) as one of the possible evidences that a fiscal court has to deal with.

Distributions from Foreign Foundations and Trusts—The Case-law of the German Federal Fiscal Court (BFH)

Abstract The taxation of distributions from foreign foundations and trusts to beneficiaries resident in Germany is highly relevant in practice, but continues to be fraught with uncertainties. The article shows that recent case-law of the German Federal Fiscal Court (BFH) has clarified the position only partially. It is shown that economic double taxation burdens can only be avoided with careful planning which should ideally start before establishing German tax residency.

Recent developments in German taxation of distributions of foreign trusts and foundations to their Germany-based beneficiaries

Abstract Distributions of foreign trusts and foundations to their Germany-based beneficiaries may be subject to German income and gift tax. Fortunately, German tax authorities now have implemented a judgment of the German Federal Fiscal Court rendered on 3 July 2019 stating that distributions made by a foreign foundation to its Germany-based beneficiaries are not subject to German gift tax provided that (i) the distribution has been made in accordance with the foundation’s statutes and (ii) the beneficiary does not have a claim regarding the distribution received. However, there are still some cases in which gift tax may be levied on such distributions, so that the risk of potential double taxation with both income and gift tax is still not completely off the table.

Are the public organizations obliged to pay the vehicle equity tax on the ownership of their vehicles?

The article it will be absolved regarding whether or not public bodies are obliged to pay taxes on the concept of the Vehicle Equity Tax, from the definition of a tax and its direct relationship with the principle of contributory capacity; as well as, if they are included within the unaffectedness referred to in article 37 of the Single Ordered Text of the Municipal Taxation Law. In the same way, if the pronouncements issued by the Fiscal Court and by the Supreme Court of Justice of the Republic, on the matter, are subject to the nature of the tax and the principle defined above.

Global Executives as Permanent Representatives in Germany – Tax Risks for Foreign Businesses

In this note, the authors discuss the potential risk of non-resident enterprises being subject to “limited tax liability” in Germany due to executive bodies being resident in or conducting business in Germany, a recent decision of the German Federal Fiscal Court in this regard and its implications in practice.

The Tax Treatment of the Income of Internationally Active Football Referees under German Law: A Commentary on the German Federal Fiscal Court Decision in IR 98/15

This article analyses a decision of the German Federal Fiscal Court on the taxation of football referees. The authors describe the relevant statements of the Court and examine the possibility of an analogous application of the decision to other sports. As the decision relates to an outbound case (from a German perspective), the authors address whether or not it could apply to inbound refereeing activities.

The Italian Interest Limitation Rule: Constitutional Issues

In this note, the author analyses the constitutional legitimacy of the Italian interest limitation rule in light of the decision of the German Federal Fiscal Court in I R 20/15 (14 October 2015) and the EU Anti-Tax Avoidance Directive (1164/2016), which is to be implemented by the end of 2018.

Tax Treaty Interpretation in Germany: Utilizing the OECD’s New Approach to the Qualification of Income

The authors, in this note, present the decision of the Lower Fiscal Court of Berlin-Brandenburg in Case 15 K 1093/10 regarding the qualification of income for the purposes of applying tax treaties, including a discussion of its implications on tax treaty interpretation in Germany.

Article 4 of the EU Anti Tax Avoidance Directive in Light of the Questionable Constitutionality of the German “Interest Barrier” Rule

In this note, the authors discuss the decision of the Federal Fiscal Court in I R 20/15 (14 October 2015), in light of the proposed EU Anti Tax Avoidance Directive.

How Will the Court Decide? – Tax Experts’ versus Laymen's Predictions

We conduct a survey of German tax professionals (tax advisors and revenue agents) and laymen to examine whether tax experts more accurately forecast the outcomes of five real cases from the German Federal Fiscal Court. With an average of 2.39 correct predictions among experts and an average of 2.49 correct predictions among laymen, our results reveal no significant difference in forecasting accuracy between the two groups. Additionally, neither general nor task-specific tax expertise increases the experts’ forecasting accuracy. This unpredictability of tax court decisions indicates that accounting rules and taxpayer penalties that rely on accurate predictions of tax court decisions may need to be re-evaluated. Moreover, our results indicate the existence of two types of ‘advisor bias’. First, tax advisors exhibit a significantly higher level of overconfidence in comparison to other experts (i.e. revenue agents) and laymen. In particular, they believe that they correctly predict, on average, 1.52 more cases than they actually do. Second, we find some evidence indicating that tax advisors acting as client advocates form stronger appeal recommendations than revenue agents.

The German Federal Fiscal Court: An Overview

In this article, the author describes the organization and functioning of the German Bundesfinanzhof (Federal Fiscal Court) and his approach to select issues of German (international) tax law.

The German CFC Rules after the Federal Fiscal Court Decision of 11 March 2015: A Toothless Tiger?

The groundbreaking ruling by the German Federal Fiscal Court dated 11 March 2015 significantly reduced the legal consequences of the German CFC rules, as income that is taxed under the CFC rules is now no longer subject to German trade tax. Especially for German corporate shareholders in CFCs, this reduces the tax burden by about 50%. This, in connection with the favourable taxation of dividends under the German CFC regime, has a tremendous impact on international tax planning from a German perspective. It leads to the question if even offshore investments triggering the German CFC regime are now being preferable to German domestic investment structures. Given this background, the following article revisits opportunities and challenges from a German tax planning perspective.

Germany’s Fiscal Court Rules on Tax Deductibility of Donations to Foreign Charities

In a most recently published judgment (8 May 2015), the German Federal Fiscal Court 1 specified the requirements under German tax law regarding the deductibility of donations to foreign charitable organizations. Whereas the national German written law rules as such are rather straight-forward and clear, these rules had to be interpreted in the light of recent ECJ rulings. In that regard, the German Federal Fiscal Court rendered a landmark decision with far-reaching consequences.

Referral to the ECJ on (Final) Cross-Border Losses – Timac Agro Deutschland (Case C-388/14)

The authors review a case that was referred to the ECJ by the Fiscal Court of Cologne (Timac Agro Deutschland (Case C-388/14)), which raises issues regarding German loss recapture rules that applied until 1998 and the deductibility of final losses incurred by an Austrian PE at the level of the German parent company applying the Marks &amp; Spencer (Case C-446/03) exception. The court explicitly questions the compatibility of recent German Federal Fiscal Court decisions with ECJ case law and the interpretation of the finality criterion set out in Marks &amp; Spencer.

O Julgamento Liminar de Procedência em causas Repetitivas pelo Juiz de 1° Grau: Alternativa Viável para o Combate à Morosidade Processual nos Juizados Especiais Cíveis Estaduais

Com o intuito de ampliar o acesso à justiça no Brasil foram publicadas as Leis 9.099/95, 10.259/01 e 12.152/09, que regulamentam os Juizados Especiais Estaduais, Federais e Fazendários, respectivamente. No entanto, após quase 20 (vinte) anos da criação dos Juizados Cíveis Estaduais, encontram-se abarrotados de processos, não cumprindo a sua função de desburocratizar a justiça e de conceder um acesso efetivo e célere à população brasileira. O presente estudo tem como objetivo, portanto, demonstrar que a aplicação do julgamento liminar de procedência nas causas repetitivas pelo juiz de 1° grau de jurisdição constituirá um mecanismo viável para atender satisfatoriamente os brasileiros no que diz respeito à distribuição da justiça através dos Juizados Especiais Cíveis Estaduais.

Tax Treaty Treatment of Start-Up Expenses in Connection with the Establishment of a PE

The author discusses the questions of attribution of income derived prior to the establishment of a Permanent Establishment (PE) based on a decision of the German Federal Fiscal Court. Therefore, the author gives an overview of the Court's findings, which lead to tax exemption of expenses incurred for establishing a PE, even if the PE fails. These findings are discussed thereafter with regard to the interpretation of treaties under particular consideration of the Treaty's purpose. This is because tax exemption of expenses relating to a failed PE leads to non-recognition of expenses, which may be regarded as a form of double taxation. Further, practical implications are discussed, whereat the author addresses implications of the ECJ's case law on the recognition of 'final losses' as well as of a Treaty Override clause in German Tax Law. Consequently, the author disagrees with the position taken by the Court and the German tax authorities. While attribution of income to a PE should not depend on the time when income is derived, to effectively avoid non-recognition of income, attribution should, in the author's view, not occur before existence of a PE.