BFH Updates On Business Facilities (Extended Trade Tax Deduction)

German tax residents must report worldwide income on their tax returns, including rental income from foreign properties and investment earnings from abroad.

Germany's Federal Ministry of Finance has proposed a fundamental shift in how exchange crypto-assets like Bitcoin and Ether are taxed, moving them from "other income" to investment income with a flat 25% tax rate. The reform abolishes the one-year tax-free holding period for new acquisitions while introducing withholding tax obligations for domestic crypto-asset service providers. How will these changes affect long-term investors, high-income earners, and the operational burden on crypto platforms?

Germany's advance lump-sum taxation regime imposes annual deemed investment income on German tax-resident investors in qualifying investment funds, regardless of distributions.

When a German employer hires foreign EU workers for a short-term project without proper tax and social security documentation, what appears to be a cost-effective staffing solution can quickly transform into a financial burden. Through a detailed case study and sample calculations, this analysis reveals how routine audits can expose compliance gaps that nearly double the actual employment costs.

Germany's Annual Tax Act 2024 (Jahressteuergesetz) brings tweaks to the country's Income Tax Act (Einkommensteuergesetz). Due to adjustments to Sec. 22 no. 5 sentence 2 of the act...

The following case involves Germany on one side, but this example may be applicable for many other jurisdictions.

Corporate transactions in Germany present complex tax considerations for buyers and sellers, with fundamentally different implications depending on whether the deal is structured as an asset or share transaction. Understanding how capital gains taxation, real estate transfer tax, and depreciation rules apply to each structure is essential for optimizing after-tax outcomes and managing inherited tax liabilities.

The German Federal Constitutional Court is set to rule on the constitutionality of Section 8c of the Corporate Tax Act, which mandates complete forfeiture of tax losses when more than 50% of a corporation's shares change hands. The Hamburg Fiscal Court has supplemented its 2017 referral order with new details about a specific case where losses would be forfeited solely due to share acquisition, raising fundamental questions about whether this provision violates Germany's constitutional principle of equality

The Fiscal Court of Münster has ruled on a critical question in German reorganization tax law: when assessing whether a contribution in kind qualifies for tax-neutral treatment, should authorities examine the circumstances on the actual contribution date or the retroactive tax effective date? This decision challenges longstanding administrative guidance and could fundamentally reshape how businesses structure tax-efficient reorganizations involving partnership interests and special business assets.

Germany has enacted significant reforms to its real estate transfer tax rules for share deals, addressing the controversial issue of double taxation that previously arose when signing and closing occurred at different times. The new legislation establishes a clear hierarchy between tax provisions and extends notification periods, fundamentally changing how M&A transactions involving real estate-owning companies are taxed.

Congratulations! You plan to become managing director (Geschäftsführer) of a German limited liability company (a "GmbH").

M&A COVID-19 Wire - Part 9

Recently the AIFM Transformation Act which, inter alia, has replaced the German Investment Funds Act by the German Capital Investment Act .

The German Federal Government plans to revise the so-called attribution taxation applicable to German-resident founders/settlor and beneficiaries of foreign family foundations and trusts under Section 15 German Foreign Tax Act (Außensteuergesetz – AStG).

Since the implementation of the AIFM-Directive, the marketing of funds by third country managers to professional investors in Germany requires marketing approval.

The German Act on the Adaption of Investment Fund Taxation in Connection with the AIFM Directive (the "AIFM Tax Act") did not pass the legislative process prior to the Federal Election. Initially, it was envisaged that the AIFM Tax Act should enter into force on 22 July 2013.

On 21 July 2015, the German Federal Ministry of Finance released a discussion draft for a proposed German Investment Tax Reform Act.

On 11 May 2022, the German Federal Ministry of Finance (BMF) published its long-awaited circular on "the German income tax treatment of cryptocurrencies and other token".

Existing funds which no longer invest after July 22, 2013 are not required to comply with the provisions of the KAGB, even if the manager of such funds also manages funds which still make investments.

On 14 May 2020, the German Federal Parliament adopted a draft law to mitigate the conse-quences of the COVID-19 pandemic in competition law and for the self-governing organisa-tions of the commercial sector.