By Wilhelm Haarmann and Oliver Dörfler, Haarmann, Hemmelrath & Partner, Frankfurt, Germany
1.Introduction
In a long awaited decision, the German Supreme Tax Court has recently upheld that dividend stripping transactions with German stock cannot be considered abuses of legal forms (decision of 15 December 1999, docket-no. I R 29/97). The very first of its kind, the case is a landmark decision in this area of German tax law, one of the most controversial issues in German tax over the past decade. A 1992 report estimated annual revenue losses due to dividend stripping in the range of several hundred mio. DM each year. After years of inattention to the subject, the German tax authorities began to bear down hard on dividend stripping schemes in the early 1990’s. Of course, this caused considerable unrest in the banking community. For banks and brokers, who have not only come under pressure by the German SEC, but also by the German fisc, who promptly pronounced such structures abusive,
