By Thomas Sauter
This article was first published in International Tax Review July/August 2002, p. 68
For editorial cut-off date, disclaimer, and notice of copyright see end of this article.
A recent decision by Germany's highest tax court revises the interpretation of section 160 of the German Tax Procedure Act (AO or Abgabenordnung) as it applies to mailbox companies resident within the EU.1
Section 160 AO permits the German tax authorities to disallow deduction of otherwise deductible payments where the taxpayer fails upon request to identify the recipient of the payment. While the provision applies by its terms to resident and non-resident recipients, it has frequently been invoked with regard to payments made to foreign resident entities that lack economic substance and may have been interposed for tax evasion purposes.
